Posted by: consula | August 20, 2016

Corporate Manslaughter

In my last article, I looked at a broad range of matters that highlighted the range, scope and breadth of risks facing directors and corporation. In this one I want to focus on the risks and changes in the law relating to corporate manslaughter. 2008 saw significant changes to corporate manslaughter. On the 6 April 2008, the Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) came into force. The new Act, whilst in itself not lengthy or complicated, has had an impact across the corporate world and understanding the risk and the nature of the new offence is vital for the senior management and board of any organisation.

Corporate manslaughter is as serious as it gets- it involves the unfortunate death or deaths of a human being., a person, an individual. It is difficult to consider the abstract concepts of this area of law objectively when in reality it will arise as a result of the death of someone, and the effect of that death on their family. As a lawyer, stepping back from the emotive morality, looking at the abstract may seem cold, but in fact, maintaining an objective composure when considering this creates a space in which risk, governance and corporate responsibility can be given due consideration.

The Act only applies to deaths where the conduct or harm, leading to the death, occurs on or after 6 April 2008, anything prior to that date would be covered by the old common law rules. Section 17 of the 2008 Act states Individuals will not be able to bring a private prosecution for the new offence without the consent of the DPP.

The offence was created to provide a means of accountability for very serious management failings across an organisation. The offence works in conjunction with other forms of accountability such as gross negligent manslaughter for individuals and other health and safety legislation. Section 1(2) states the offence applies a corporation, a department of other body listed in schedule 1, a police force and a partnership of trade union or employer’s association that is an employer. I want to explore in particular section 1(3) and 1(4). Section 1(3) states “(3)An organisation is guilty of an offence under this section only if the way in which its activities are managed or organised by its senior management is a substantial element in the breach referred to in subsection (1).”This suggests that the culpability rests on the implementation of policy or decisions made by the board or governing committee of the organisation. Normally, once policy or strategy has been agreed at board level, the implementation is left to the “senior management” of the organisation who report to the board. This is significant for both risk management and for relationship management and risk register management within organisations, particularly organisations which involve staff or the public being exposed to an insured risk. The recent events at Alton Towers Theme Park come immediately to mind.

Section 1(4)(c) makes specific reference to “senior management” and states: “(c)“senior management”, in relation to an organisation, means the persons who play significant roles in—(i)the making of decisions about how the whole or a substantial part of its activities are to be managed or organised, or (ii) the actual managing or organising of the whole or a substantial part of those activities.”

Taking a step back from the definitions and rules in the Act, the risk question that comes to my mind is whether a director or non-executive director, or board member, who agree a strategic or policy issue for the organisation are “responsible” as “senior management” or whether there is a distinction between strategic policy decisions and the implementation of those policies by key senior managers in the organisation. Section 18 of the Act states that there is no individual liability for aiding or abetting corporate manslaughter. It is, to my mind, an important point that the Act makes this distinction.

The difficulty is that many of us who are trustees or directors on boards of various commercial and non-commercial organisations will not likely be faced with the reality of having to face Corporate Manslaughter charges. One recent example is the case of Linley Developments who were convicted of corporate manslaughter and fined £200,000, plus costs of £25,000. This was widely reported in the press in January 2016 and I don’t propose to outline the particulars of the events. I do want to focus, however, on the resulting outcomes of the conviction for the company, its board and senior managers. The company’s managing director and project manager were both given

suspended prison sentences after pleading guilty to breaching CDM Regulations. The investigation found that Linley Developments, failed to carry out a risk assessment or create a method statement for the excavation; had not installed supports or buttresses to prevent the wall falling forward as the trench deepened; and the wall was inherently unsafe because, during construction a year before, the foundations had not been bonded with it.

Trevor Hyatt, 50, of Letty Green, Hertford was given a six month prison sentence, suspended for two years, after pleading guilty to breaching Regulations 28 and 31 of the Construction (Design and Management) Regulations. He was also fined £25,000 with £7,500 in costs. Judge Bright said he had considered disqualifying him as a director but did not believe it “necessary, proportionate or just to do so”.

Alfred Barker, 59, of Gazeley, Suffolk was given a six month prison sentence, suspended for two years, after pleading guilty to breaching Regulations 28 and 31 of the Construction (Design and Management) Regulations. He was ordered to pay costs of £5,000. Mr Hyatt and Mr Baker also faced charges of gross negligence manslaughter, but they were not proceeded with after they pleaded guilty to the two CDM breaches.

Linley Developments was fined £200,000 and ordered to pay costs of £25,000 after pleading guilty to corporate manslaughter on 7 September. It was allowed to pay the fine over six years. The judge also made a publicity order against the company, instructing them to take out an advert in the trade press detailing their prosecution.

As you can see, apart from the consequences to the company itself, a number of individuals, directors and senior managers on-site were handed convictions and fines and it is clear from this case and others that failures relating to health and safety, particularly in relation to higher risk activities, can have very serious, financial, criminal and reputational consequences. Inevitably the risks will vary from organisation to organisation, depending on the nature of what they do and how board decisions impact health and safety related matters.

Mitigating these risks involves a combination of clear reporting, policy, understanding of the risks of the organisation and the personal risks, including having a written and well published health and safety policy, and access for employees to relevant and competent health and safety advice. – and, inevitably – insurance.

Regular reviews of organisations policies, understanding of the risks associated with the work they undertake and documented training ensures staff, including board and senior management, are competent in their responsibilities. As well as the need for insurances there has been a distinct change of focus from corporate to personal accountability- which affects board members who may merely be unfortunate rather than complicit. Claims can be made against both the organisation and individual directors, whose personal assets could also be put at risk. Whatever the size of business, liability associated with corporate manslaughter is potentially unlimited and can be severe both personally and professionally.

Directors’ and officers' insurance can offer peace of mind to you and your management team; putting fully qualified legal experts at your disposal should things go wrong. In reality, though, whilst insurance can cover reputational risks, professional risks, employee risks, legal expense or fines, it does nothing to protect an individual director who has received a conviction, even if the sentence is suspended, from being exposed to a harsh and real, and emotively real, consequence. As with the strict criminal liabilities that relate to money laundering and the weight of regulation that already comes with the “normal course of business” health and safety and the corporate manslaughter consequences to the individual directors and managers held responsible can be mitigated, insured and understood but there is no escape from the inevitable emotive and reputational reality that an individual director may have to deal with.

Posted by: consula | August 20, 2016

Judicial Review, Compliance and Corporate Disputes

Since the 2008 “Great Recession” (there are those who believe it has not yet ended1, the UK has seen Corporate litigants flock to the courts in a range of disputes. There have been consumer-related disputes with financial institutions. There have been disputes between directors and shareholders in a number of high-profile cases2 . There have been disputes between different corporations (breach of contract, intellectual property and so on) and there have been disputes between businesses and regulators.

Intertwined across this plethora of legal cases, the threat of fraud, money laundering and regulatory non-compliance menaces the commercial decisions made by boards and senior management. It is well-known in the legal profession that the rules governing dispute resolution have undergone considerable change following the reforms of Lord Justice Rupert Jackson and the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”).

In short, the legal landscape of 2016 is radically different from that of 2012/13. The review of Court fees4, although strenuously challenged by the legal professions5, saw a huge increase in Court fees – with more to follow in April 2016. In his Final Report6, Lord Justice Jackson said:

 “In some areas of civil litigation costs are disproportionate and impede access to justice. I therefore propose a coherent package of interlocking reforms, designed to control costs and promote access to justice.” Few in the legal profession saw the reforms as “promoting access to justice”.

One of the most contentious areas of reform relates to Judicial Review. Judicial Review is an important part of any regulated business’ “access to justice”. Although not fully included in LASPO, Judicial Review was the focus of Part 4 of Criminal Justice and Courts Act 2015. In December 2014, whilst just a Bill, it was reported that:

“Eleven police and crime commissioners, including former solicitor general Vera Baird, have written to The

Times describing the plans a "potentially deep injustice".” 7

Chapter 30 of Lord Justice Jackson’s Report focused on Judicial Review and proposed one-way cost shifting based on the proposed rule: “Costs ordered against the claimant in any claim for personal injuries, clinical negligence or judicial review shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including: (a) the financial resources of all the parties to the proceedings, and (b) their conduct in connection with the dispute to which the proceedings relate.”

Subsequently, Part 4 of the Criminal Justice and Courts Act 2015 (“CJCA”) finally made fundamental changes to the operation of Judicial Review, including:

  A court must not permit a judicial review if it appears highly likely; that the decision or action by the public body would not have been substantially different if the conduct complained of had not occurred (s.84).

 The court must be given information about the financial resources above a certain level – that are available to the party wishing to bring the judicial review (s.85). The court must take this into account and consider making a cost order against any party identified in that information as providing financial support for the proceedings (s.86).

 Third-party interveners in judicial reviews may have to pay other parties; costs if certain conditions are met. These conditions include 'unreasonable behaviour; by the intervener and if the intervener’s actions have not been of significant assistance to the court; (s.87).

 Cost-capping orders will only be available after permission for a judicial review is granted, rather than before (ss.88-90).

 Schedule 16 makes amendments to the procedures for planning challenges under certain legislation, including the Town and Country Planning Act 1990.

 In the face of this radically different, less-accessible, more expensive approach to justice, combined with a far more ferocious regulatory structure for finance, money-laundering, consumer rights and the legal system, corporate dispute resolution has had to adapt, perhaps becoming more akin to risk-management than dispute resolution8.

Imagine, a regulator makes a decision that affects your business, perhaps limiting or revoking an authorisation or licence. You don’t agree that that decision is right. You want to challenge it whilst protecting your commercial interests. Unlike before the CJCA, you are now exposed to a requirement for the Court not to permit your case to progress and a requirement to disclose financial resources – both of which could prevent you getting the access to justice you and your business are looking for. Maybe you are a developer looking to challenge a planning decision or a financial advisor whose FCA authorisation has been revoked for reasons which you disagree with. Whatever the grounds, you and your business are now less likely, overall, to consider Judicial Review due to increased cost, increased obstacles and increased uncertainty.

The new landscape for regulation and compliance appears to come with a tougher stance from regulators (reeling from the embarrassment of the past) and more obstacles to challenge these decisions following LASPO and CJCA. It is only a matter of time before we see the impact of these changes (as we saw when the number of cases brought before the Employment Tribunal tumbled following the introduction of the new fee structure9, or the sharp rise in litigants in person following the Jackson Reforms and LASPO 10 ).

On a practical day to day level, many regulated businesses will want to find certainty. Unfortunately, it appears the only certainty available is a consistent uncertainty as the new landscape takes shape. Regulators may well find that they are defending fewer decisions, but ultimately, the commercial interests of the regulated business must be balanced with compliance and commercial needs. This approach will help to mitigate the unwanted regulatory decisions and also theoretically put corporations outside of the “highly likely that the decision or action by the public body would not have been substantially different if the conduct complained of had not occurred” bracket. A lot remains to be seen, and inevitably there will be winners and losers – the question you will be asking yourself is which is your business going to be!

1 See Andrew Fieldhouse Huffington Post 2014

2 “Tesco faces £100m damages claim over accounting black hole” By Alan Tovey, Industry Editor The Telegraph Jan 26 2016

3 See, for example, “Hundreds of businesses want a judicial review into the FCA's decision to scrap its report into banking culture” Lianna Brinded, Business Insider UK, Dec. 31, 2015

4 Court Fees: Proposals for reform April 2014

5 See, for example, “Society mounts challenge to new court fees” By John Hyde 31 January 2015

6 Review of Civil Litigation Costs: Final Report December 2009 (Published by TSO (The Stationery Office))

7 Judicial Review reform: An attack on our legal rights?, Clive Coleman Legal correspondent, BBC News

8 See “Future of legal risk management: lessons from the insurance industry” By Jeremy Irving,, In-House Lawyer Tuesday, 09 November 2010

9 See “Tribunal claims plummet after introduction of fees” Personnel Today, By Madeleine Graham on 13 Mar 2014

10 See “Key litigant in person charity sees incredible 900% rise in clients helped” By Katie King Legal Cheek OCT 16 2015

Posted by: consula | August 20, 2016

Consula Registers for MLR

Consultant Lawyer Solutions Ltd has registered for MLR with HMRC. Some businesses have to register with HM Revenue & Customs (HMRC) under the Money Laundering Regulations if your business is a Trust or Company Service Provider, unless you’re already supervised by another body. Consultant Lawyer Solutions Ltd isn’t a law firm or claims management company, so has no supervising body. Our Founding Director, Martin Callan, who is a Fellow of the Chartered Institute of Legal Executives (CILEx) and a Chartered Legal Executive, is individually regulated by CILEx through CILEx Regulation Ltd who are his supervising body under The Money Laundering Regulations 2007 as amended by The Money Laundering (Amendment) Regulations 2015 (SI: 2015 No. 11)

HMRC has produced guides which will help you decide if you need to register with HMRC as a Trust or Company Service Provider. They will guide you as to what types of business are covered and what types aren’t, and links to information about how to register if you need to or elect to voluntarily. A Trust or Company Service Provider is any firm or sole practitioner whose business is to form companies or other legal persons together with a range of associated services.

A Trust or Company Service Provider is any firm or sole practitioner whose business is to form companies or other legal persons together with a range of associated services. Consula provides such services to UK and International clients as part of a range of packaged services that combine legal, regulatory, business, finance and accounting.

Registration under the MLR provides an added layer of compliance and protection to clients, businesses and consumers but also to the UK Government Tax authorities.

Earlier posts on this blog related to our Founding Director, Martin Callan, who sat on two HM Treasury committees for 8 years relating to Stamp Taxes Land Duty and Tax De-regulation. Martin knows first hand that HMRC is determined to systematically reduce fraud, tax avoidance, tax evasion and to maximise tax revenue intake across all of its departments. This policy, combined with more restrictive legislation relating to tax haven’s, non-dom’s, and an increasing number of anti-avoidance measures, backed up by a significant increase in the number of legal cases being found in their favour has resulted in a number of new requirements for UK Businesses.

Consula prides itself on its commitment to delivering quality services within a regulatory framework that provides Consumers and Clients with the standards and protection they deserve.

Consula has recently launched a new international Start-Up Business Package for small businesses looking to access the UK/EU market. Working with our partner accountants, lawyers and immigration advisors we are now able to provide non-UK residents with a range of packaged solutions to enable them to enter the UK/EU market.

Our packages are bespoke to each business need and cover company formation, UK-Bank Accounts (with optional “point-of-contact” service for non-UK residents), legal and regulatory support, accounting, immigration services, tax and business support as required.

Consula has launched a new website to promote this new service, and welcomes enquiries from across the world. If it’s easy for big business to trade in different markets, then we want to make it easy for small businesses to do the same – our competitively priced packages are designed for the smaller business who wants to develop their niche in the UK and the EU.

 We have already secured our first Client and will be actively promoting our new packaged services. If you are interested in setting up in the UK, get in touch with us today to find out what we can do for you.

Posted by: consula | February 11, 2013

Consula provides access to market-leading PI Exit Process

Consula now provides access to an innovative and market leading personal injury market exit process which will interest  many law firms who provide personal injury services., which provides legal, business and other services to law firms, start-ups and business,  is focused on current market opportunities emerging as a result of the Jackson reforms implementation under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”).

LASPO has been very controversial in the legal world and its implementation of the Jackson reforms is creating a wave of changes, out of which new market opportunities are being established. The move by Consula is intended to target the majority of Personal Injury (PI) Firms in England and Wales. The process is specifically designed for PI firms who are either likely to experience financial difficulty or are already looking to exit the PI market, but are keen to retain the maximum WiP possible on their book of cases, rather than sell them off “on the cheap”.

This new and market-leading exit solution assists firms’ exit from the market in an orderly, structured way, avoiding potential fire-sales of their existing book of work. The process also delivers a significantly improved financial return than is otherwise available from other options in the marketplace.

The increasing turmoil in the PI Market as a result of Jackson, where more than 3,000 PI providers  directly affected by the changes, has resulted in a number of different “exit-strategies” by various providers. The majority of those existing schemes, however, fail to provide anything reaching a 40% return on WiP, which will concern those looking to exit the market.

Consula’s process delivers returns on WiP of up to 90%.

Consula’s process  can also help those in financial difficulty avoid insolvency, providing greater security to the profession during these increasingly dynamic times.

The process involves the exiting firm transferring their entire book of work to a panel.  The process, which is administered professionally by a dedicated team and includes transparent reporting, allows  withdrawal sensibly from the PI market. The process should be of interest to law firms facing pending insolvency, cash flow difficulties and those facing re-structures. It is also likely to be of  interest to firms wishing to exit the market voluntarily, perhaps due to retirement or those who simply wish withdraw from this over-competitive market.

More details about the process are available on Consula’s website here.