LloydLaw LLP

Costly and embarrassing mistakes

We've just received some direct mail from a legal publisher with a "Warning" as its subject. The Warning reads:

"Are you making costly and embarrassing mistakes when drafting commercial contracts?" and goes on to promote a new edition of a book on commercial contracts.

It's an intriguing approach because I can't imagine any solicitor responding: "Oh, yes, I've been making costly and embarrassing mistakes and must buy this book". Surely they know that solicitors rarely, if ever, admit to making mistakes.

The Race to the Bottom

Amusing post from (our) accountants 3CA on the prospective client who wanted a "cheap accountant".

Why a cheap accountant isn't always cheap

Different Ways of Getting Company Documents Drafted

Most weekends I buy the FT newspaper for all sorts of reasons.  One of them is a general interest in the Business Entrepreneurial section. Going back through a few old copies, before I chucked them into the recyling I came across a very helpful question and answer in the Business Questions section.

I could link to it, but the FT requires registration (free) and I thought it might be easiest if I simply reproduced it here. (It's September 10/11 2011).  It addresses the painful and often expensive issue of how best to get basic corporate documentation sorted out for a start-up business.

"I'm the managing director of a start-up manufacturing business. We're in the process of preparing a shareholder agreement, supplier contracts and employment contracts for our staff and are worried about the costs involved in hiring a law firm. I've come across a numer of online legal documents that purport to fulfil our needs but I am unsure of their quality and whether they carry the same weight as bespoke documents."

The response is from Grahame Cohen, chief product and technology officer of Epoq which provides technology solutions to the legal sector. 

"There are an awful lot of confusing options out there, so I'll identify them, highlight their differences and then suggest a best fit for you. I suspect what you have come across so far are the various services scattered throughout the web that allow you to download pre-written templates, commonly in Microsoft Word.

These are often very low cost but come with a significant downside, as you have to essentially act as your own lawyer and try to edit them to ensure they suit your purposes. These services generally exclude all liability, so you're not covered if something goes wrong. This is a risky option which you should avoid unless you simply can't afford anything else.

There are more advanced services that use online questionaires to interview you in a similar fashion to a solicitor. Using your answers, they create comprehensive documentation based on your circumstances. These are often a little more expensive but a far better option as the documentation quality is likely to be on a par with bespoke drafting. As you are looking to draft agreements vital to your company I suggest that a solicitor reviews them to ensure you don't fall foul of any compliance regulations. Ideally, what you want is a blended service - which certain forward thinking law firms now offer - combining online questionnaires with their trusted advice, so you get the best of both worlds at a more affordable fixed fee. A useful resource to find these firms is www. OnlineSolicitorsDirectory.co.uk."

New Cookie Law Comes Into Effect

A new law that requires consumers to consent to cookies being put on their computers came into effect today (26 May 2011).

The change reflects an amendment to the EU's Privacy and Electronic Communications Directive. Until now, businesses were required to tell people how cookies were used and give them a chance to "opt out" if they objected.

Now, though, not only are businesses obliged to tell people, but they also need to get their consent.  The only exception is when putting a cookie on someone's computer is "strictly necessary" for a service requested by that person.

Consumers should therefore be expecting to be asked permission from today. And businesses need to start thinking about how they are going to ask it.

Given the short lead-in time to these new Regulations coming into effect (3 weeks) and the general low level of awareness, the Information Commissioner is proposing that businesses start to think about the practical steps they need to take to comply with the new law. The ICO has produced a helpful guidance note.

Sensibly, immediate and complete compliance is seen as unrealistic, but businesses should be able to show they are looking at the issue and working towards compliance and they are clearly expected to come up with new innovative ways of doing it. Meanwhile, the ICO has a nice simple box on its home page showing us the way.

The Cost of Lax IT Security

The whole saga of ACS Law, the firm of solicitors which pursued thousands of people for allegedly infringing copyright based on information provided by internet service providers (ISPs) is a troubling one.

There's vast amounts of information about Andrew Crossley, the solicitor who ran the firm, out there on the web, including the judgement of a disciplinary hearing  back in 2006 which related to his failure to file accounts with the Law Society (as all firms are required to do).

The saga took another turn last week when the Information Commissioner's Office fined Mr Crossley £1000 for his failure to keep confidential information secure. Not only did he not seek any professional advice when setting up and developing the IT system, but he apparently used a web hosting package that was intended for domestic use alone.

In addition to the press release, the full transcript of the ICO's judgement makes for an interesting read. Mr Crossley appears to have convinced the ICO that he has fallen on hard times which accounts for the reduced fine. As the ICO has indicated, a more realistic fine would have been £200,000.

Exclusions and Limits of Liability in IT contracts

A good article in a "Back to Basics" series on exclusion clauses and limitation of liability clauses. Not just for lawyers.

First in series on contract formation is here.

Checklist - What to look for when you use English solicitors

When I first started out in practice a solicitor friend of mine used to get really wound up about solicitors being the only business that tells our clients how to complain about our services before we've even started.

He had a point. I recently had to instruct solicitors in a personal capacity and received a client care letter that was over 9 pages long. It had clearly been the victim of serial revisions and was littered with errors. I politely suggested they read it through themselves.

Penny and I have been revising our own client care letter to ensure it is "compliant" but it's a challenging process.

If you are a business of any size instructing solicitors (i.e. getting solicitors to do some work for you) then as part of your own due diligence you should ensure that you are clear about way in which the relationship will work. I have produced the following Checklist which may be helpful. There are two good reasons for ensuring any law firm complies with this list. Firstly, you need to be sure they are compliant with their own regulatory obligations and secondly, you need to keep control of expenditure, or at least be in a position to monitor it.

1. Is the firm a sole practice, a partnership, a LLP or a limited liability company?

2. Have you received an up to date client care letter?

3. Have you signed and returned it?

4. What is the firm's compulsory layer of professional indemnity insurance? Who is the insurance with?

5. Does the firm limit its own liability in any way?

6. Have you received the firm's Equality and Diversity Policy? Does it comply with your own?

7. Have you received the firm's Complaints Procedure?

8 . Has the firm confirmed it is registered as a Data Controller?

9. Have you considered whether you need more details about the firm's data retention policy?

10. What happens to any documentation you provide to the firm? How long does the firm keep it?

11. Has the firm indicated the likely costs of dealing with the matter?

12. Do you know who has authority to instruct the firm to do any new work?

13. Are you liable for costs and expenses eg. photocopying?

14. Have you retained the right to audit the firm in relation to data retention?

15. Has the firm clarified the manner in which you can terminate the retainer and the consequences of doing so?

16. Do you have the firm's VAT number?

17. Has the firm confirmed what will happen to interest earned on any "client monies" it holds on your behalf?

18. How does the firm want to be paid?

19. Has the firm confirmed whether it is audited or quality checked by any third party? If so, is your matter likely to be subject to checking?

20. Is any work outsourced and have you been asked if you object to this practice?

Nominet to release .uk short domains from 1 December 2010

Nominet has announced it is going to accept applications to register a number of specific "short" domains which, for various reasons, it has withheld until now. The process starts on 1 December 2010 when trade mark holders can apply."Short" domains are two and three letter domains like "pa.co.uk" and "3.co.uk". There's a full list of available domains here.

If you are not a registered trade mark holder, then there is a chance for unregistered rights holders to apply in a second sunrise phase which will take place some time in 2011, before a final landrush phase when the domains become available to everyone. More details are available on the Nominet site.

Nominet consultation on short .uk domain names

Nominet is planning to release two letter, one character and other reserved .uk domains. The current rules don't allow for two letter domain names.  This raises a number of interesting issues, highlighted in some of the responses to the ongoing consultation process.

The consultation period ends on 8 June 2010 after which, presumably Nominet will annouce the details of how these domains are going to be released. It will affect all .co.uk, .org.uk and .net uk domains. No doubt, The XX will be taking particular interest.

The Story of the Dog and the MBA

Lying on your CV is never a good thing and there's a brilliant example of how badly it can all go wrong in the recent case of BSky v EDS.

A director of an EDS company had claimed in one of his witness statements that he was the holder of an MBA from "Concordia College St Johns 1995-1996".  Naturally, solicitors for BSkyB checked this out  given, I assume, that it's not the world's most renowned college for MBAs. And they presumably could not believe their luck when they  discovered that there was no such college and anyone could buy an MBS qualification online. The director, Joe Galloway, was cross-examined about the qualification and went into detail about the nature of his attendance, the buildings he visited (which clearly did not exist) and persisted with the story.

Counsel for BSkyB took the entertaining step of acquiring one of these MBAs for his dog "Lulu" and was able to present Lulu's MBA, including  a letter of recommendation to the court, thus destroying any credibility the witness might have had. The Judge provides a detailed review of his assessment of Mr Galloway's credibility, which is well worth reading.

Not surprisingly, Mr Galloway, who was sacked by EDS was found to be completely dishonest and a wholly unreliable witness whose evidence was given no credibility at all.

The case itself, involved a dispute between BSkyB and EDS which arose after problems EDS had in building and implementing a CRM system for BSkyB. It highlights the need to balance "overselling" i.e. making promises which you cannot keep and misrepresentation. And it also serves as a reminder that credibility really does make a difference.