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SDT – fining guidelines

The Solicitors Disciplinary Tribunal has for the first time published fining bands guidance, along with commentary on the more detailed mitigating factors.

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Professional – update

The merger of CMS, Nabarro, and Olswang is going ahead – it will create a firm with combined fees of £1bn [2016] LSG 10 October 4. At the other end of the scale, Prolegal, a ‘new breed’ of PI firm has gone into administration [2016] LSG 10 October 2. There are concerns that holiday sickness compensation is becoming a new hunting ground for claims management companies, given the marked increase in the number of gastric illness claims, many of which are unsubstantiated. One law firm involved in this area says on its website that average compensation for mild food poisoning ranges from £700 – £3,000, and claimants could receive anything from £7,000 to £40,000 if the food poisoning is severe [2016] LSG 31 October 3.

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Money laundering – 4MLD

The Fourth Money Laundering Directive (4MLD) was due to be implemented by June 2017. However, the EC has now brought the deadline forward to 1 January 2017. Many governments (including the UK) have said that this timetable simply cannot be met.

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Accounts – accountant’s report

Previously, the Accounts Rules were unclear as to whether a solicitor who held little client money would need to obtain an accountant’s report. The guidance was that a waiver could be obtained if there were only a small number of client money transactions, or if a small amount of client money was held. But, there was no guidance on what counted as ‘small’. This meant each application had to reviewed on an individual basis.

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Partnership – forfeit profit share?

A partner who is in breach of fiduciary duties may forfeit their profit share (as well as having to pay compensatory damages). Similar principles apply to an LLP member. This was confirmed in a recent case where the compensatory damages were £1.5m, but the loss of profit share amounted to £10m.

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Social media – downside

Marketers are always exalting law firms to embrace social media to spread the firm’s brand. As a counter-balance it should not be forgotten that badly judged postings can virtually destroy a brand. For instance, Milton Keynes firm Baker Small specialises in representing local authorities defending claims brought by parents of children with special educational needs. The law firm posted several tweets in which it gloated about defeating some of those claims, but the language used was at best insensitive, and at worst deeply offensive. The end result was extensive adverse publicity (in particular, by social media), with several LAs then deciding to no longer instruct the firm – resulting in it losing over £1m-worth of business. In practical terms, the firm’s brand within that sector has been all but destroyed by its stupid use of social media. [2016] LSG 11 July 19.
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Accounts – interest policy

’Interest paid must be a fair and reasonable sum calculated over the whole period for which the money is held’ (r23.1 Accounts Rules 2011).

All firms should have an ‘interest policy’. While there is no definition of ‘fair and reasonable’, the guidance notes to r23.1 give examples of the factors that will have to be considered when deciding on an interest policy. The amount paid as interest need not necessarily reflect the highest rate of interest obtainable but it is unlikely to be the lowest. Factors to be taken into account will include the sum held; the length of time; the need for instant access; current rates of interest; and the practice of the bank where the account is kept. The end result is that the practice should set an interest rate which incorporates all of these factors, and that should be reviewed on a regular basis to ensure that it is still appropriate.

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Lateral hires – confidentiality risks

Usually, a firm will carry out conflict of interest checks when hiring a senior lawyer or partner from another firm. But, the suggestion is now being made that such checks should also be made with more junior staff (eg newly qualifieds).
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Crowdfunding – CrowdJustice

There are two types of crowdfunding. On the one hand, you can have an equity-based system whereby funders get a financial return if the case succeeds (a model that is popular in the US). On the other hand, there are straightforward donation-based funders (‘pure funders’) who do not get a financial return. Crowdfunding is the modern variation of this, where individual donors make a small contribution, typically as ‘pure funders’.
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Practice valuation – realism

There are some 10,000 law firms that contain four partners or fewer. The average age of an equity partner will be 63. An article in the SJ argues that many still have totally unrealistic expectations of the value of their practices.
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Page 6 of 33

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Disputed will – guidance; procedure
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What should you do if asked for correspondence and other documents in relation to a will you prepared for a client who has since died?  Read more...
MoJ – IT meltdown
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Many litigators are no doubt all too aware of the Ministry of Justice (MoJ) January 2019 IT failures that hit the delivery of frontline legal services in some courts.  Read more...
Statutory notices – service
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The SC has widened the scope of the service of statutory notices. Read more...
Part 36 offers – appropriate
Wednesday, 13 February 2019
Part 36 of the CPR allows a claimant or defendant to make an offer of settlement before trial. If the offer is not accepted and the opposing party does not meet the offer at trial, the court may... Read more...
Noise nuisance – liability?
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A recent High Court decision has confirmed that L is not liable for nuisance caused by its T merely because L does not take steps available to prevent the cause of the nuisance, even when L knows... Read more...
RICS – service charges
Wednesday, 13 February 2019
We noted the RICS Code of Practice on service charges in our October 2018 issue, p19; the ‘Service Charges in Commercial Property (1st edition)’ comes into force on 1 April 2019. Read more...
Notice of severance – rectification?
Wednesday, 13 February 2019
A recent case reminds practitioners of the importance of ensuring that a notice of severance accurately records all of the titles intended to be severed. Read more...
Children – parental responsibility; removal of
Wednesday, 13 February 2019
In what circumstances might the court order the removal of PR from the father? The author comments on a recent case which involved a unique set of circumstances justifying the removal of PR.  Read more...
Incompetence – not discrimination
Wednesday, 13 February 2019
The CA has held that an incompetent process does not amount to discrimination. Read more...
Sentencing – contempt of court
Wednesday, 13 February 2019
The Court of Appeal has ordered a new trial in relation to a claimant remanded to prison overnight for discussing evidence in a civil case.  Read more...

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