Welcome to the February 2022 Edition of Lawyer Monthly! Our front cover feature for this month looks into the ongoing cryptocurrency market crash and one of its major underlying causes: a surge in national bans on crypto mining and trading across the globe. What countries have banned crypto, and what are the latest regulatory developments? Turn to page 12 for more information. This month’s edition also contains a plethora of articles of interest specifically for law firms. On page 50, James Gardner identifies three secrets that can give your firm an edge in the legal marketing space, and on page 62 we hear from Charlène Gisèle Bourliout on the measures firms can take to prevent burnout in their lawyers and help them to deliver sustainable excellence. Other insightful articles focus on the legal system itself, with Ruslan Ughrelidze examining the attractions of the UK courts post-Brexit (page 60) and a team from Pillsbury taking a deep dive into the merits and drawbacks of compulsory mediation (page 24). As ever, this issue also features a roundup of lawyer moves and evolving stories from across the sector. We hope you enjoy this edition! UniversalMedia Limited Approx. 302,000 net digital distribution. LAWYER MONTHLY©2022 Universal Media Limited Lawyer Monthly is published by Universal Media Limited and is available on general subscription. Readership and circulation information can be found at: www.lawyer-monthly.com The views expressed in the articles within Lawyer Monthly are the contributors’ own. All rights reserved. Material contained within this publication is not to be reproduced in whole or in part without prior permission. Permission may only be given in written form by the management board of Universal Media Limited. Universal Media Limited: PO Box 17858 Tamworth, B77 9QG, United Kingdom Tel: 0044 (0) 1543 255 537 Follow Us: @lawyermonthly @LawyerMonthly @lawyermonthly linkedin.com/company/lawyer-monthly - EDITOR Oliver Sullivan editor@lawyer-monthly.com PRODUCTION MANAGER Emma Tansey production@lawyer-monthly.com - A Note From the Editor Oliver Sullivan Editor - Lawyer Monthly LM EDITOR'S NOTE 3 FEB 2022 | WWW.LAWYER-MONTHLY.COM
INSIDE THIS ISSUE Contents 4 WWW.LAWYER-MONTHLY.COM | FEB 2022 12 Crypto Crisis WhyAreCountries Banning Virtual Currencies? WORLD REPORT 6. Monthly Round-Up 8. Lawyer Moves - Recent Appointments FRONT COVER FEATURE 12. Crypto Crisis: Why Are Countries Banning Virtual Currencies? By Oliver Sullivan SPECIAL FEATURES: 16. Delivering Justice for SMEs By Alexandra Marks 20. How Can Litigation Funding Level the Playing Field for Justice? 24. Compulsory Mediation: Is There an Upside? 28. A Cautionary Tale for Professional Advisers Over Duty of Care 30. Could the United States Legally Ban Asbestos Forever? 34. Helping Clients Tackle Climate Change Through Biodiversity 38. Your Firm Has a Story That Your Clients Don’t Know – And They Should 42. TOP 5: Most Financially Successful Lawyers in the World By Rachel Makinson 44. Embracing the Future of the Law Firm 48. Zero Trust: Why Your Firm Should Care EXPERT INSIGHT 60. The Value of UK Courts in Post-Brexit Dispute Resolution By Ruslan Ughrelidze 62. How Can Firms Deliver Sustainable High Performance Through Wellness? By Charlène Gisèle Bourliout EXPERT WITNESS 66. Use of Force: When is it Appropriate? By Martyn Bowie TRANSACTIONS 70. What’s Happening in the World of M&As and IPOs? Secrets to Legal Marketing Success By James Gardner Lawyer Monthly 50
INSIDE THIS ISSUE 5 FEB 2022 | WWW.LAWYER-MONTHLY.COM Ruslan Ughrelidze The Value of UK Courts in Post-Brexit Dispute Resolution Expert Insight fromCharlène Gisèle Bourliout on: 60 Embracing the Future of the Law Firm 44 42 TOPFIVE Most Financially Successful Lawyers in the World HowCan Firms Deliver Sustainable High Performance Through Wellness? 62
MONTHLY ROUND-UP Microsoft has appointed Simpson Thacher & Bartlett as lead adviser on its $68.7 billion deal to acquire games publisher Activision Blizzard. Simpson Thacher will also work with Skadden, Arps, Slate, Meagher & Flom on the deal. According to a court document, Qatar Airways is seeking over $600 million in compensation from Airbus over surface flaws on its A350 jetliners. SIMPSON THACHER APPOINTED LEAD ADVISER ON $70 BILLIONMICROSOFT - ACTIVISION DEAL QATARAIRWAYS SEEKSOVER $600MILLION INAIRBUS A350DISPUTE Prosecutors said that the founder of the nowdefunct medical startup had knowingly lied about Theranos’ technology, which she claimed could detect diseases with just a few drops of blood. The jury found Holmes guilty of four charges, including conspiracy to commit fraud against investors, and three counts of wire fraud. In total, Holmes faced 11 charges but was found not guilty of four charges relating to defrauding the public. She denied the charges, each carrying a The company is also asking judges in the UK to order Airbus to suspend the delivery of any of the jets until the alleged design defects have been rectified. of lightning protection. Qatar Airways says it has been ordered to stop flying 21 of its 53 A350 jets as issues arose, thus prompting the ongoing dispute with Airbus. Qatar Airways is calling for $618 million in contractual compensation over the partial grounding it has experienced. Additionally, the airline is seeking $4 million for each day the 21 jets remain out of action. Qatar Airways’ claim also maximum prison term of 20 years. Founded in 2003, Theranos had promised to revolutionise the healthcare industry and, at one point, reached a valuation of $9 billion. However, the company’s claims quickly began to fall apart after a 2015 Wall Street Journal investigation reported that Theranos had been widely overstating the capabilities of its blood-testing technology. Holmes is due to be sentenced on 26 September. LM Qatar Airways and Airbus have been in dispute for several months over damages including blistered paint, cracked window frames and erosion of a layer includes $76 million for a single 5-year-old A350 that was set to be repainted for the 2022 World Cup. The aircraft has allegedly been parked in France for a year requiring 980 repair patches after gaps in the lightning shield were exposed by the aborted paint job. Airbus said in a statement that, while it acknowledges technical problems, there are no safety issues with the jets. LM 6 WWW.LAWYER-MONTHLY.COM | FEB 2022
MONTHLY ROUND-UP The US Supreme Court has blocked President Biden’s coronavirus vaccination-or-testing mandate for large businesses. Following a landmark trial that began in late August, Theranos founder Elizabeth Holmes has been convicted of defrauding investors. ELIZABETHHOLMES TRIAL: THERANOS FOUNDER CONVICTEDOF FRAUD Prosecutors said that the founder of the nowdefunct medical startup had knowingly lied about Theranos’ technology, which she claimed could detect diseases with just a few drops of blood. The jury found Holmes guilty of four charges, including conspiracy to commit fraud against investors, and three counts of wire fraud. In total, Holmes faced 11 charges but was found not guilty of four charges relating to defrauding the public. She denied the charges, each carrying a maximum prison term of 20 years. Founded in 2003, Theranos had promised to revolutionise the healthcare industry and, at one point, reached a valuation of $9 billion. However, the company’s claims quickly began to fall apart after a 2015 Wall Street Journal investigation reported that Theranos had been widely overstating the capabilities of its blood-testing technology. Holmes is due to be sentenced on 26 September. LM SUPREME COURT BLOCKS BIDEN’S VACCINE MANDATE FOR LARGE BUSINESSES Biden voiced his disappointment with the conservative-majority court’s decision to halt the rule requiring vaccines or weekly coronavirus tests for staff at businesses with 100 or more employees. In a statement, Biden said it is now up to states and employers to decide whether or not to make vaccination mandatory. The Supreme Court ruled 6-3 in blocking the rule for large businesses, a policy that would have applied to over 80 million employers across the nation. The court’s majority downplayed the threat of coronavirus, particularly in the workplace. They compared it to “day-to-day” crime and pollution hazards that individuals constantly face. Meanwhile, the court supported a separate federal vaccine requirement for healthcare facilities, such as hospitals and nursing homes, voting 5-4 to allow the rule. This makes vaccination against coronavirus mandatory for approximately 10.3 million workers at 76,000 healthcare facilities that accept funds from the Medicare and Medicaid government health insurance programmes. LM 7 FEB 2022 | WWW.LAWYER-MONTHLY.COM
LAWYER MOVES
LAWYER MOVES Leading transatlantic law firm Womble Bond Dickinson (WBD) has bolstered its national health and safety practice with the appointment of new partner Kevin Elliott. Kevin will join the firm's UKwide regulatory team, currently led by partner Jon Cooper. Prior to his new appointment, Elliott was a partner in the health and safety team at Eversheds Sutherland, with a strong track record of advising organisations and individuals on seriousworkplace incidents. Elliott has been involved in most of the firm’s high-profile health and safety cases over the past two decades and represented clients across the energy, construction, manufacturing, transport, food and drink and public sectors. In addition to this experience, Elliott brings a wealth of expertise in advising on contentious environmental investigations and prosecutions. In the past, he has worked with the Maritime and Coastguard Agency to prosecute health and safety and pollution incidents in UK territorial waters. Over the last decade, Elliott has been ranked in the UK legal directories in the top tier of practitioners. The directories describe him as "greatly experienced” and “incomparably brilliant". He is also a lecturer, author and broadcaster on health and safety topics and a regular speaker at major conferences in the UK and across Europe. Jon Cooper welcomed Elliott’s arrival: "We're pleased to welcome Kevin to the partnership and to our well-established health and safety practice,” he said. “Kevin is recognised as one of the leading health and safety specialists in the UK and his expertise fits perfectly with our sector-focused approach.” New Partner Boosts Womble Bond Dickinson’s Health and Safety Practice National law firm Irwin Mitchell has announced that it is recruiting Jonathan Moore to its construction team as a new partner. Moore will be the fourth partner in the specialised construction team, bringing its total membership to eighteen. The team is led by Mark Clinton and is par of Irwin Mitchell’s property division, which now numbers 28 partners and 147 qualified lawyers. Moore joins Irwin Mitchell from Spencer West LLP, the chambers practice where he was the lead construction disputes partner. He will be based in London. Prior to joining Spencer West, Moore was partner at Fenwick Elliott, where he worked on a variety of significant high quality, high value construction dispute related work including advising on a significant $1 billion international arbitration comprising a series of disputes in relation to a major infrastructure project in the Middle East and advising in relation to a £50 million R&D renewable power plant project dispute. Moore has also acted in a significant number of domestic adjudications and subsequent enforcement actions at the TCC for a number of the top contractors in the UK and Europe and advised on disputes in the UK and Ireland, mainland Europe, United Arab Emirates, Saudi Arabia, Brazil, Trinidad & Tobago, and Hong Kong. His high-profile projects in the UK have included the Scottish Parliament, Edinburgh Trams, London Overground’s East London Line extension and Crossrail. Osborne Clarke has added payments specialist partner Paul Harris to its financial services sector team in London. Joining the firm from Linklaters, Harris is a financial services regulatory specialist with experience at the FSA, in private practice in the City and as a legal service provider within a Big 4 consultancy. He brings expertise across the complete range of activities carried on under the Financial Services and Markets Act 2000, Payment Services Regulations and Electronic Money Regulations. Harris advises clients on the full spectrum of financial services regulatory matters, with a particular focus on payment services, e-money, fintech, crypto-assets, mergers and acquisitions of regulated firms, regulatory change programmes, and in interactions with the regulators. Harris’s appointment comes as part of a wave of growth across Osborne Clarke’s international financial services teams, following on from the recent appointment of partner Karima Lachgar to head its Paris-based financial services, fintech and crypto-assets practice. Irwin Michell Appoints New Partner to Construction Team Osborne Clarke Expands Financial Services Sector Team 10 WWW.LAWYER-MONTHLY.COM | FEB 2022
LAWYER MOVES Latham & Watkins has announced the appointment of Sarah Fortt and Betty Moy Huber, who will join the firm as partners in Austin/ Washington, DC and New York respectively. More notably, the two will serve as global co-chairs of Latham’s multi-disciplinary ESG practice alongside London partner Paul Davies. In a press release, the firm stated that both Fortt and Huber will be members of the firm’s Capital Markets & Public Company Representation Practice Group within its corporate department and will advise public and private companies, financial institutions, investment funds and their boards. Fortt’s practice focuses on advising public and private companies and their boards on ESG-related corporate governance, disclosure obligations, and regulatory requirements. She has frequently worked with boards on managing their approaches to governance, crisis management and preparedness, succession planning and board education, particularly on ESG and corporate culture matters. Huber is an experienced advisor to public and private companies and boards of all industries and sizes on the full range of ESGrelated corporate governance matters, with over 25 years of advising on ESG matters across hundreds of transactions. Matters that she consults on include board oversight of ESG risks and opportunities, environmental, social, human rights, sustainable finance, “net-zero” commitments and targets, ESG reporting, disclosure and related controls, corporate culture, stakeholder engagement, shareholder activism, board composition and refreshment, fiduciary duties, board assessments, and shareholder proposals. Houston partner and Latham & Watkins executive committee member Ryan Maierson said in a company release: “We are thrilled to welcome Sarah and Betty to the firm and to their leadership roles in our ESG practice”, adding "Their addition comes at a perfect time as we see a rising focus on ESG among businesses and investors, and a growing need for the kind of cross-cutting, comprehensive advice that we provide." Latham&Watkins Build Upon Global ESG Advisory Capability Global law firm Jones Day has announced three internal promotions of partners to leadership positions. Lisa Taliadoros has become Partnerin-Charge of its Melbourne office, John M Saada Jr has become Partner-in-Charge of its Cleveland office and Heather Lennox has been appointed Global Practice Leader of the firm’s global business restructuring & reorganisation (BRR) practice. Having joined Jones Day’s Sydney office in 2010, Taliadoros will be returning to her home town in taking up leadership of the Melbourne office. She has served as Head of the firm’s intellectual property practice since 2018 and was recently ranked among leading lawyer sin the Chambers and Partners 2022 Asia-Pacific Guide. Her practice focuses on global intellectual property disputes. Saada is a partner in the firm’s private equity practice who has worked in the Cleveland office for almost 30 years, beginning his tenure as a summer associate in 1992. In addition to representing private equity and venture capital funds in their formation and governance, he regularly represents investors in a wide variety of funds. He succeeds Lennox as the Cleveland office’s Partner-in-Charge. Lennox became a partner in Jones Day’s BRR practice in 2002 and has participated in some of the most important restructuring cases in the US since that date. Such cases include work on behalf of the City of Detroit, Hostess Brands, FTD Florist and Peabody Energy Corp. She is also a member of the National Bankruptcy Conference, which advises Congress on national bankruptcy policy, and a Fellow in the American College of Bankruptcy. She succeeds Bruce Bennett, who has led Jones Day’s BRR practice since 2016. Bennett will continue to advise clients as a partner in the practice. Jones DayAnnounces Raft of LeadershipAppointments 11 FEB 2022 | WWW.LAWYER-MONTHLY.COM
Written by Oliver Sullivan Crypto Crisis WhyAreCountries Banning Virtual Currencies?
WWW.LAWYER-MONTHLY.COM 14 Cryptocurrency experienced a record bull run in 2021, briefly propelling the market past $3 trillion in value in November. Two months later, a wave of new crypto restrictions and outright bans by several major economies has coincided with a catastrophic price plunge, all but erasing the market’s gains. Russia became the latest nation to join in the evolving conversation this week as the Bank of Russia called for a blanket ban on the mining, trading and usage of cryptocurrencies in the country. Though it remains to be seen whether any ban will materialise after President Vladimir Putin weighed in on the side of crypto miners, Russia would be far from the first to implement such measures. The list of countries that wholly banned cryptocurrencies includes China, Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh and (as of this month) Kosovo. Forty-two others have passed restrictions to this effect, prohibiting crypto exchanges or limiting the ability of banks to engage with crypto. What are the factors driving these decisions, and how might they affect the future of global crypto regulation? Economic Impact The current global ‘crypto crash’ is not the first time that Bitcoin and the wider crypto market has greatly depreciated in value. Similar crashes have occurred in 2021, 2020, 2018, 2013 and even earlier. These cyclical bull and bear runs are owed to the inherent volatility of crypto. As a decentralised currency independent of the backing of governments or financial institutions, Bitcoin and other virtual tokens allow for greater transactional freedom while being susceptible to extreme price fluctuations sparked by investor speculation and media hype. Crypto’s volatility has spurred the creation of so-called ‘stablecoins’ such as Tether, which do away with the premise of decentralisation by pegging themselves to the price of a stable asset – commonly the US dollar – though these tokens are highly dependent on the resources and good behaviour of their issuers, as was shown when a lawsuit brought by the state of New York found that Tether Holdings did not possess the $69 billion it claimed to be backing its currency. A case study can be found in El Salvador, which in September 2021 became the first country to adopt Bitcoin as legal tender. Intended to expand financial inclusion and help residents save on annual commissions on remittances, only a small fraction of businesses moved to accept transactions in Bitcoin due to concerns over price volatility and data privacy. The International Monetary Fund (IMF) cited these issues alongside “large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection” in a report recommending that El Salvador remove Bitcoin’s legal tender status. Lack of Regulation As an emerging technology, new legislation has been required to define and govern the use of cryptocurrencies, with widespread recognition of the assets among governments a relatively recent development. For some investors, the blockchain’s emphasis on individual users and lack of state regulation is one of its primary selling points. For governments, this lack of regulation presents significant issues, not least the difficulty involved in calculating the tax liability of cryptoassets. The Indian government touched on this while announcing a bill to ban most private cryptocurrencies in November. In addition to allowing only certain cryptocurrencies to promote the underlying technology and its uses, India will launch its own official cryptocurrency. Prime Minister Narendra Modi has also been outspoken on his wish for deomocratic nations to cooperate on the regulation of crypto to ensure that it does not “end up in the wrong hands”.
WWW.LAWYER-MONTHLY.COM 15 blamed large-scale crypto mining. As climate change becomes yet more prevalent on national agendas, it is reasonable to guess that cryptocurrency restrictions will continue to strengthen as nations reach for new ways of mitigating the crisis. Criminal Potential Cryptocurrency’s usefulness for money laundering and buying drugs online has been known to regulators for years, and its prevalence has never diminished to any great extent – even during crypto bear runs, the volume of ‘dark net’ transactions remains as high as ever. Indeed, illicit activity appears to be the sole area of crypto transactions that is not affected by large-scale price fluctuations. The COVID-19 pandemic has exacerbated the spread of dark net crypto transsactions, largely in the area of ransomware attacks where infiltrators encrypt a victim’s information and demand payment in their preferred form of cryptocurrency. The worry that crypto’s potential criminal usage may outweigh its benefits was referenced explicitly in the Bank of Russia’s January report calling for a nationwide crypto ban. Turkey’s 2021 crypto ban used language in a similar vein, as did China’s most recent anti-crypto crackdown. Of course, this potential for risk has not escaped the rest of the international community. The US may soon take a regulatory stance of its own to combat fraudulent crypto practices, with President Biden reportedly readying an executive order asking federal agencies to weigh the risks and opportunities posed by cryptocurrencies. TheDamage is Done Regardless of whether or not the US and western Europe take their own steps to curb blockchain trading, the damage that the wave of regulation has inflicted on investor confidence in crypto may already be irreversible. January has seen both popular and niche cryptocurrencies plummet in value, wiping out around $1.4 trillion from the combined crypto market. Bitcoin and Ethereum have both crashed more than 50% from their 2021 peaks, while other assets have fallen more than 80%. Should the US further countries implement crypto restrictions of their own, this slip may be set to grow even more steep. The staunchest crypto supporters are not dissuaded, however. Online investor communities continue to urge each other to hold their crypto portfolios. In response to the IMF’s recommendation that his government give up Bitcoin as legal tender, El Salvador’s President Nayib Bukele responded with a derisory meme. We can only wait and wonder whether their instincts are right, or if this latest trough might be the one that finally sticks – and what the global regulatory world may look like in 2023. Australia has made similar moves towards tighter government oversight of cryptocurrency, announcing its intent to create a licensing framework for crypto exchanges alongside a possible digital currency backed by its Reserve Bank. These measures will likely only become more commonplace over time as governments continue to crack down on large technology companies, particularly in the payments space. Climate Impact While predominantly identified as an issue by end users, the impact of widespread cryptocurrency usage on the climate has not escaped the notice of governments. The root of the problem lies in crypto’s use of blockchain systems and their reliance upon heavy usage of computer power; each Bitcoin transaction, for instance, requires the majority of computers on the Bitcoin blockchain network to verify the action. Bitcoin is one of the greatest energy consumers in this respect, with each individual exchange requiring 1,173 Kilowatt Hours’ worth of energy to complete – the rough equivalent to six weeks’ worth of energy consumption in an average American household. Bitcoin mining and transactions alone expend an amount of energy per year comparable to the entire country of Norway. Aside from the greater impact that this expenditure and the associated carbon emissions have on the climate, crypto’s intensive energy use has an immediate impact on power grids, particularly in developing nations. Following a recent series of power cuts, the government of Iran has claimed that illegal crypto mining has been responsible for “10% of electricity outages this winter”. Meanwhile, Kosovo’s recent decision to ban cryptocurrencies entirely came on the heels of its own string of power outages, for which the government likewise
16 WWW.LAWYER-MONTHLY.COM | FEB 2022 DELIVERING JUSTICE FOR SMEs What issues were identified by the Simon Walker Review that prompted the founding of the Business Banking Resolution Service (BBRS)? Walker conducted a comprehensive analysis of the scale and complexity of banking complaints from SMEs, particularly in the wake of the 2008-09 financial crisis. His Review was published in 2018 and focused on disputes that remain unresolved despite the SME raising a complaint with their bank yet may be unsuitable for court processes. Walker found that there was no evidence of “systemic malpractice” by banks during the crisis. However, he stated that “individuals and units within certain banks, responded to the crisis in an ad hoc manner which was sometimes unreasonable and panicked, occasionally reprehensible, and almost always distressing for those affected.” Walker made a number of recommendations on how to move forward, with particular emphasis given to the need for complaints to be reviewed on the basis of what is fair and reasonable in the circumstances. This is due in part to the fact that courts have often found banks not to have acted unlawfully. In response to the Walker Review, the seven UK banks operating in this market agreed four proposals. The creation of the BBRS addresses points two, three and four: 1. Support for the extension of the Delivering Justice for SMEs Alexandra Marks Chief Adjudicator Business Banking Resolution Service C/O Legalinx Limited, Tallis House, 2 Tallis Street, Temple, London, United Kingdom, EC4Y 0AB Tel: +44 0345 646 8825 E: hello@thebbrs.com www.thebbrs.org Following the 2008 financial crisis, a wave of complaints was launched by SMEs against banks, many of which still remain unresolved. The Business Banking Resolution Service (BBRS) was recently established in response to this. In this feature, Lawyer Monthly hears from Alexandra Marks on the purpose of the BBRS and the organisations that may find its service relevant. Alexandra Marks has over 35 years of experience as a lawyer. For the past 15 years, she has sat as a part-time judge in the Crown Court, High Court and First-tier Tribunal. Before that, she was a partner at Linklaters and an accredited mediator. Alexandra is also deeply involved in human rights and social justice organisations. She was Chair of Amnesty International for 10 years and has been a Council Member of JUSTICE since the 1980s. The Business Banking Resolution Service (BBRS) is s a non-profit organisation set up to resolve disputes between eligible larger SMEs and participating banks. To find more information about the service and discover whether it could be relevant for clients, free resources can be found on the BBRS website or by emailing the organization at hello@ thebbrs.com.
DELIVERING JUSTICE FOR SMEs Financial Ombudsman Service to cover businesses with turnover of up to £6.5 million; 2. Access to an appropriate ombudsman scheme for SMEs with turnover of between £6.5 million and £10 million and a balance sheet up to £7.5 million; 3. The creation of a voluntary business banking ombudsman scheme for eligible historic cases; 4. The creation of an independent and transparent advisory council with the ability to consider emerging trends and issues regarding access to finance, the treatment of SME customers by financial services providers and the provision of appropriate support to SMEs to ensure there is an ongoing dialogue to address potential challenges early and effectively. Could you summarise what services the BBRS provides and what makes a business eligible to receive them? The BBRS has been designed by the seven participating banks, in partnership with SMEs and UK Finance, to meet small businesses’ needs in seeking to resolve disputes with their
18 WWW.LAWYER-MONTHLY.COM | FEB 2022 DELIVERING JUSTICE FOR SMEs banks. We offer an alternative to litigation, removing the cost and stress of going to court for SMEs. My judicial experience has shown me that the fabled ‘day in court’ is often a disappointment for parties hoping to tell their story. We offer a much richer opportunity for individuals to give their account in their own words, which we believe can offer a better route to closure. The BBRS has two schemes: one for contemporary cases and one for historical cases, with slightly different eligibility criteria. Broadly speaking, we are able to assist UKregistered businesses, trusts, charities, friendly societies and co-operative societies which have an unresolved complaint against one of the banks participating in the BBRS. A customer must first have complained to their bank and given them the opportunity to resolve the issue prior to bringing it to the BBRS. Our contemporary scheme covers cases for the period from 1 April 2019 onwards: it is for businesses with a turnover of less than £10 million per annum and a balance sheet of less than £7.5 million. The complaint must not be, or have been, eligible for the Financial Ombudsman Service. As we have been carefully designed to dovetail with the Financial Ombudsman Service, the applicable criteria for the historical scheme, depend on when the alleged act or omission by the bank occurred: • For the period from 1 December 2001 to 31 October 2009: businesses with a turnover of at least £1 million but less than £6.5 million per annum and a balance sheet of less than £5 million may be eligible. • For the period from 1 November 2009 to 31 March 2019: businesses with a turnover of more than €2 million (to reflect the European definition of ‘SME’) but less than £6.5 million per annum, and a balance sheet of more than €2 million but less than £5 million may be eligible. The BBRS’s criteria do not include employee numbers, but as the Financial Ombudsman does take this into account, SMEs with complaints made on or after 1 November 2009 and a turnover and annual balance sheet each of less than €2 million may also be eligible for the BBRS if they employed 10 or more persons. The BBRS is unique in several ways, but perhaps most interesting is its concessionary case process. This process means that we may, in some circumstances, be able to look at complaints even though they are technically ineligible for the scheme. Broadly speaking, this would apply to cases that fall slightly outside our eligibility criteria but we consider worthy of attention and so ask for the relevant bank’s consent to do so, or to cases that have already been through independent review schemes but have new evidence which was not previously considered. Our eligibility criteria are far from straightforward, and we would advise anyone with clients who could be eligible to register them for the service. Solicitors are valuable intermediaries for us, and we have already seen a number of customers with representation. How does the BBRS work with businesses and banks to effectively resolve disputes? The service has been designed to be easy to access, empathetic and flexible in its My judicial experience has shown me that the fabled ‘day in court’ is often a disappointment for parties hoping to tell their story.
Throughout my career I have been interested in the ‘David vs Goliath’ dynamic in the search for justice. 19 FEB 2022 | WWW.LAWYER-MONTHLY.COM DELIVERING JUSTICE FOR SMEs approach. Each business using the BBRS will be assigned a Customer Champion, who will act as a single point of contact and offer practical support throughout the business’ journey through the BBRS process. We use a variety of alternative dispute resolution (ADR) techniques to settle unresolved complaints, including mediation and conciliation as well as full adjudication if necessary. We make decisions based on what is fair and reasonable in the circumstances and seek to inspire confidence through the consistency of our approach. In assessing this, the BBRS will consider all available evidence, taking into account relevant law and regulations; regulators’ rules, guidance and standards; codes of practice; and (where appropriate) what the BBRS considers having been good industry practice at the relevant time. Our scheme rules make clear that we are not looking for pleadings, so it is worth noting that lawyers need not provide these for their clients. Our jurisdiction is much broader than the courts; this is key, as many of the issues we have seen are not complaints about the banks doing something unlawful, but have been about banks treating customers poorly from the perspective of what would have been fair and reasonable. There are a number of benefits of using ADR. Crucially, ADR focuses on reaching an outcome which both parties are comfortable with – making the BBRS not only a mechanism for dispute resolution, but also for rebuilding trust between banks and businesses. Evidence shows that mediation often offers a more satisfactory outcome because the parties are involved in shaping it and can be creative about the solution to their dispute. As Chief Adjudicator, what is your role in the organisation? As Chief Adjudicator I have overall responsibility for dispute resolution, investigation and adjudication within the BBRS. I oversee the review of complaints and appeals handled by the BBRS. Working with the Customer Champions and Case Assessors, and within the Scheme Rules, I determine eligibility and the appropriate approach for handling complaints. In addition, I oversee decision-making and the appeals process. As someone with an extensive background in pro bono work and charitable organisations, what attracted you to the BBRS? Throughout my career I have been interested in the ‘David vs Goliath’ dynamic in the search for justice. It was that, coupled with my passion for social justice, that drew me to the BBRS. I am also an accredited mediator and believe that the ADR techniques used by the BBRS offer great benefits. I very much hope that we can demonstrate these benefits over time and encourage the wider use of ADR to resolve this kind of dispute. What will the BBRS be focusing on in 2022? The focus of the BBRS for the foreseeable future will be on delivering fair and reasonable outcomes for eligible SMEs. One of the main challenges we face is getting the word out to SMEs, particularly those eligible for our historical scheme, which has a deadline of 14 February 2023 for registrations. Although it is clear the banks have learnt many lessons from the financial crisis in 2008-09, I suspect we will see a rise in cases for our contemporary scheme in the future as the full impact of COVID-19 on our economy, and particularly SMEs, emerges.
20 WWW.LAWYER-MONTHLY.COM | FEB 2022 HOW CAN LITIGATION FUNDING LEVEL THE PLAYING FIELD FOR JUSTICE? Rising litigation costs have made access to justice expensive and prohibitively so for many individuals and small businesses. Many claimants are often forced to abandon or prematurely settle what are often, in our view, clearly meritorious claims. The relatively nascent but growing litigation funding sector helps to mitigate this lack of access to justice. We believe more corporate lawyers need to take the same approaches that have enabled the global stock and bond capital markets to thrive, and apply them to their own backyard — litigation. That commercial litigation suffers from a lack of capital is evidenced by strong doubledigit portfolio returns achieved by the listed litigation funders, net of losses and fees. More competition over time will increase the supply of capital and drive investor returns down to the benefit of claimants and, of course, lawyers. Benefits of litigation funding There are many benefits associated with the use of litigation finance. Litigation is often stressful for individuals and small companies both financially and emotionally. As soon as a claimant chooses to pursue litigation, they are inevitably taking on financial risk. This relates to both the irrecoverable costs of the litigation (i.e. ongoing legal fees) and the risk of having to pay the defendant’s costs if the claim fails (i.e. the adverse cost risk). Litigation funding can shift these risks to a third-party funder that has a diversified HowCan Litigation Funding Level the Playing Field for Justice? Cormac Leech CEO Diana Pupkevic Investment Analyst AxiaFunder 184 Shepherds Bush Rd, London, W6 7NL Tel: +44 203 286 5922 E: info@axiafunder.com www.axiafunder.com An emerging field, yet not one commonly engaged with by lawyers, litigation funding can prove crucial in determining the outcome of a case. This month we hear from Cormac Leech and Diana Pupkevic of AxiaFunder, who outline the latest developments in litigation funding and how they stand to benefit lawyers and the wider rule of law.
21 FEB 2022 | WWW.LAWYER-MONTHLY.COM HOW CAN LITIGATION FUNDING LEVEL THE PLAYING FIELD FOR JUSTICE? portfolio of cases and underwriting expertise and, as a result, is in a far better position to carry on these risks in the first place. Nonrecourse litigation funding allows claimants to pursue valuable claims without risking their own balance sheets. A funder performs a thorough due diligence for each case by assessing many different factors (e.g. legal merits, case economics and enforceability, among others). Thus, by agreeing to provide funding, a litigation funder directly signals to the defendant that an independent party also considers the merits of the claim to be strong. Once there is a credible threat, the defendant is typically much more willing to engage in settlement discussions. According to data from Solomonic, around 80-90% of such cases settle pre-trial. Even if a litigation funder chooses not to fund a case, the claimant and their legal team may well gain some useful feedback regarding the weaknesses of the claim. Litigation funders might also be able to assist the lawyers and claimants in managing the litigation, including assisting in strategic and tactical decisions by bringing a highly commercial and objective perspective to assessing a claim. The funder’s role can assist in the efficient management of a claim by ensuring that the focus is kept on the real issues in dispute and by seeking to avoid time and costs being spent on the pursuit of capital and are thus forced to adhere to strict investment criteria, platform-centric litigation funders (such as Lexshares and AxiaFunder) source capital from a large pool of professional, high-net-worth retail investors and are thus able to offer a more flexible low-cost funding solutions to both claimants and solicitors. This is possible since platforms offer more risk-sharing across a wider number of investors – just as the valuation of a company on the stock market will tend to increase as the investor base becomes more diversified. Platform funders can also be more flexible claims that are weak or unnecessary. Litigation funding and the rule of law Effective rule of law creates many benefits to a society – it helps to tackle corruption, poverty, and helps to protect people from various injustices. Without the rule of law, individuals and businesses cannot enforce contract, secure property rights or obtain effective redress against other individuals, enterprises, or the state. Inadequate enforcement of regulations, high presence of corruption, insecure property rights, and ineffective means to settle disputes destabilise legitimate business and discourage both domestic and foreign investment. The rule of law can thus have a deep impact on the fairness and prosperity of a society. The rising costs of litigation has made such access to justice excessively expensive for many claimants. Cuts to legal aid have worsened the picture. Litigation funding helps to improve access to justice and ensure the rule of law. Alternative funding models and future developments There is considerable innovation within the funding sector. While large litigation funders are typically backed by institutional Funding is the life-blood of the justice system. - Lord Neuberger, President of The Supreme Court.
22 WWW.LAWYER-MONTHLY.COM | FEB 2022 HOW CAN LITIGATION FUNDING LEVEL THE PLAYING FIELD FOR JUSTICE? when it comes to the case selection process itself, potentially funding higher-risk claims or claims that might take longer than usual to resolve, such as cases in international jurisdictions, as long as the transaction pricing is attractive to platform investors. Many lawyers, often considered to be a relatively cautious group, have been slow to embrace litigation funding and in particular a platform funding approach. This is not without justification; litigation often revolves around sensitive and privileged information. Platform funders need to ensure that investors sign NDAs and confirm that they are not conflicted in a way that could prejudice the claimant. Also, while investor demand for litigation assets on platforms is typically very strong, there is a degree of uncertainty regarding whether the funding will be successfully sourced and how long it will take. Some platforms have addressed this by putting backstop underwriting capital in place, much as an investment bank will sometimes underwrite a company IPO. Funding a case via a platform or otherwise has another dimension. While the details of the case are typically kept confidential, for some cases it may be appropriate to use the funding process to apply reputational pressure on the defendant. Clearly the platform model has an advantage in this respect. Funders today can profitably fund smaller cases by taking advantage of the latest digital collaboration tools and the trend towards decentralised working that accelerated during the COVID-19 pandemic. Evidencing this, at one point last year our own small team was collaborating very effectively while distributed in the UK, Spain, and Greece. In addition, traditional litigation funders typically restrict their activities to funding legal costs only. New funders are often able to provide funding for a more flexible use – for example, preliminary or seed funding to claimants (e.g. to obtain a legal opinion), providing working capital and/or to reimburse previously incurred costs. In the longer run, it seems inevitable that the blockchain and NFTs (Non-Fungible Tokens) will grow rapidly, with litigation funding a clear use case. Law coin and Liti Capital are examples of two companies focused on this. We also expect litigation funding to evolve into more of a stock market model, whereby law firms with meritorious cases can structure them with external assistance, into an investable security – in effect IPOing the litigation funding opportunity. This can be done on a single-case basis or in a portfolio format. The result will be a larger pool of available capital. Summary Despite the benefits, we are in the early innings for the sector and litigation funders are still not perceived positively in many countries. In France, for example, litigation funders are seen as greedy capitalists. In Ireland and many US states, litigation funding is perceived as a perversion of the legal system. This stems from behaviour in medieval times where feudal lords would fund many frivolous cases to upset a rival. Nevertheless, litigation funding is likely to become more conventional as the market continues to grow and develop. In countries where the litigation funding market is more developed, an increasing number of market players and competition between them results in more competitive pricing for claimants. In the very long run, just as a police force can boost law and order, the presence of funding capital will make deeppocketed defendants think twice before acting in a way that leads to litigation, which is clearly a positive outcome for society in general. Cormac Leech has focused on the alternative finance space for the past seven years. He was closely involved in raising over $2 billion for direct lending funds as a founder and director of the Liberum Alternative Finance, and also incubating several fintech startups. He has also been a senior consultant to private equity groups including VPC after spending a number of years in strategy consulting at McKinsey. Diana Pupkevic has previously completed internships at ING and British Business Bank supporting the organisation’s strategy in reducing regional imbalances in SME access to finance. Diana holds an MA in Comparative Business Economics from University College London and a First-Class Honours degree (BA) in Business Economics from University of Greenwich. She is also fluent in both Russian and Lithuanian, and has volunteered for a year at XLP, a mentoring project working with young people in disadvantaged communities in London. AxiaFunder is a UK-based litigation funding platform which offers investors direct access to pre-vetted commercial litigation investment opportunities that it expects to offer attractive risk-adjusted returns. Similarly, claimants with meritorious claims can access capital through the AxiaFunder platform, enabling their cases to progress.
24 WWW.LAWYER-MONTHLY.COM | FEB 2022 COMPULSORY MEDIATION: IS THERE AN UPSIDE? There are two ways in which mediation of a dispute can be made compulsory. The first is a matter of contract, in which the parties include in their dispute resolution clause a multi-step process which obliges them to go to mediation as a precondition to commencing litigation or arbitration. The second is legislation requiring all or certain cases to go to mediation before or at an early stage of litigation. Advantages of compulsory mediation There are several advantages of mediation but one of its key features is that, if successful, the parties will have found a mutually acceptable solution to a dispute rather than going through a lengthy and usually costly and combative process to obtain a decision from a judge or tribunal. In mediation, the parties control the process and may be able to reach more tailored solutions than those that would be ordered by a court: for example, agreeing that a payment by one party under the current dispute will be offset by increased future orders. Mediation facilitates direct communication between the parties, Compulsory Mediation Is There anUpside? Deborah Ruff Charles Goslong Julia Belcher and Charlotte Stewart-Jones Pillsbury Winthrop Shaw Pittman Tower 42, Level 21, 25 Old Broad Street, London, EC2N 1HQ UK Tel: +44 20 7847 9528 E: deborah.ruff@pillsburylaw.com www.pillsburylaw.com In our December 2021 edition, we heard from Fieldfisher partner Ann Benzimra on proposals regarding compulsory mediation in civil lawsuits. This month we hear more perspectives on the topic from Pillsbury partners Deborah Ruff, Charles Goslong, Julia Belcher and associate Charlotte Stewart-Jones. What are the pros of the idea, and is there any way they can outweigh the cons?
25 FEB 2022 | WWW.LAWYER-MONTHLY.COM COMPULSORY MEDIATION: IS THERE AN UPSIDE? which can help preserve commercial relationships that are likely to be damaged by the inevitably adversarial process of litigation or arbitration. If a settlement is achieved at an early stage, there can be significant savings of time and costs and, even if a settlement is not reached, the process may help to narrow the issues between the parties. If attempted at an early stage, mediation may also prevent parties from becoming entrenched in their respective positions. Even at a later stage, mediation can give the parties a fresh perspective and an opportunity to reconsider the merits of their respective cases and save the costs of a full trial or hearing. Despite the merits of mediation and increased awareness of the process among the legal community, there is still a perception amongst non-lawyers that mediation is an alternative adjudicatory process to litigation rather than a potentially useful part of the overall dispute resolution process. There is, however, no obligation (even in mandatory mediation) to reach a resolution of the dispute. All parties need to accept any proposed solution; otherwise the adjudicatory process (whether litigation or arbitration) will proceed. mediation is confidential, so long as a party “shows up”, it will be almost impossible for a judge or arbitrator to take obstructive behaviour in the mediation into account when considering how to allocate costs if the dispute does not settle. Similarly, if compulsory mediation becomes seen as a “box-ticking” exercise, the parties may not put in the effort and preparation required to achieve a successful outcome. Timing is also an important consideration. If the parties are required to mediate before issuing a claim or at a very early stage, they may feel they have not had adequate time or information to assess the merits of their respective cases. Rightly or wrongly, litigants frequently believe that the disclosure process, in which each party has to provide to the other adverse documents, will result in the disclosure of a “smoking gun” that will tip the merits of the case in the favour of the party seeking disclosure, and they may therefore be unwilling to engage in any meaningful way until after disclosure. Indeed, there are some types of case, such as actions for breach of intellectual property rights, where it would be very difficult for the claimant to make its case without disclosure of the other party’s The skill of the mediator is to help the parties find common ground. The mediator will encourage the parties to consider not only the strengths and weaknesses of their cases from a legal perspective, but also the risks of proceeding to trial and the costs they may incur, both their own irrecoverable costs and potential adverse costs orders. Even if the parties attempt bilateral negotiations, they may not consider these types of issues sufficiently. Even reluctant parties to mediation may be surprised by the progress they are able to make when they have an opportunity to speak freely in a confidential setting, assisted by a talented and experienced mediator. Anecdotal evidence suggests that around 50% or more mediations do result in a settlement being reached, either at the mediation itself or thereafter. However, mediation is not always the answer. Disadvantages of compulsory mediation Mediationonly succeeds if there is agenuine attempt to settle on both sides. If a party has been compelled to mediate against its will, it is quite likely to fail to participate fully in the process, thereby wasting both its own and its opponent’s time and costs. As There is still a perception amongst non-lawyers that mediation is an alternative adjudicatory process to litigation rather than a potentially useful part of the overall dispute resolution process.
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