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Energising Yorkshire entrepreneurs The story of an amazing Yorkshire-based social enterprise

a lupton fawcett denison till periodical

Issue 5 Let’s look at bribery A heads up on the world of modern law Energising Yorkshire entrepreneurs Making the case for Insolvency Practitioners Social enterprise never tasted so good

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Contents 3.

The  changing face of Lupton Fawcett Denison Till How new appointments and new services are helping us grow.


Personal Profile: Andrew Lindsay A heads up on the world of modern law.


Bribery and global risk Our second look at bribery and corruption and their implications for UK business.


Making the case for Insolvency Practitioners A look at how Insolvency Practitioners can be an invaluable trusted partner, not just a last resort.


Business Advantage Scheme News of our exciting ‘entrepreneurship’ collaboration with Leeds Beckett University.

Welcome to the fifth edition of atticus. We’ve filled this issue with the latest news, advice, profiles and insights: essential reading for keeping your finger on the pulse and learning about exciting opportunities to improve the way you do business.

10. HR support: too good to be true A warning about the misleading claims of some HR and Employment Law ‘specialists’. 12. Consumer  rights: getting them right Staying within the law when it comes to providing  your customers with their consumer rights. 13. A social enterprise success story The story of an amazing Yorkshire-based social enterprise and the involvement of one of our directors. 14. Insolvency and company directors The roles, risks and responsibilities of company directors when times are hard.

Lupton Fawcett Denison Till Yorkshire House, East Parade, Leeds, LS1 5BD Leeds: T: 0113 280 2000 F: 0113 245 6782 Lupton Fawcett Denison Till Belgrave House, 47 Bank Street, Sheffield S1 2DR Sheffield: T: 0114 276 6607 F: 0114 276 6608 Lupton Fawcett Denison Till Stamford House, Piccadilly, York, YO1 9PP York: T: 01904 611411 F: 01904 646972

Lupton Fawcett Desinson Till atticus is printed on paper that uses only recycled fibre and wood from sustainably farmed sources as well as being carbon balanced.

Scan this code and it will direct you to the atticus web page, where you can download a PDF of the latest and previous editions or read them online. Standard text rates and data charges may apply.

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The main aim of atticus is to inform and entertain, but we also hope to give you an insight into Lupton Fawcett Denison Till, and some of our clients and contacts, along the way. We don’t intend this to be a technical publication, but we will keep you up to date with any changes and trends in the law that we think are interesting or relevant. Finally, we fully expect to evolve and develop this journal over time to better reflect the kinds of articles that you would like to read, so please don’t hesitate to let us know what you think and to make any suggestions for future editions. E-mail your thoughts to

Kevin Emsley Chairman

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A Lupton Fawcett Denison Till Periodical. Issue 5

Richard Marshall

At Lupton Fawcett Denison Till we continue to develop our position as Yorkshire’s law firm of choice for the region’s businesses and their owners. In my introduction to the last edition, I reported on our merger with York firm Denison Till and our view that there’s a huge opportunity to better serve the need for legal services for businesses and their owners in York and North Yorkshire. Today, I’m delighted to say that our assessment was correct, an achievement demonstrated by 35.5% growth in our York office in the first twelve months since our merger, and also by our expectation of exceeding 100% growth by the end of the current financial year.

We’re growing, and so is our expertise and service… It’s been an exciting period of growth for our firm, and that has brought benefits for our clients as well as good news for us.

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The last edition also announced the first lateral hires into our York office, since strengthened by a number of appointments into our Private Client Department, Commercial Property Department, Ecclesiastical and Charity Law Department and our Construction team. These include the appointment of Caroline Mockford as a Director in the Ecclesiastical Department and Niamh Batterton as a senior solicitor in Construction. We’ve also grown our Sheffield office with the appointment of Rob Cooke to head up Property Litigation and Joan Pettingill in Employment Law. In Leeds, things have been equally busy, and I’m delighted to announce that we have been joined by Nick Bell. Nick is a senior and highly-regarded banking lawyer, and he’ll further strengthen each of our sector specialisms by offering banking expertise and advice alongside our Corporate, Property and Agricultural teams. Based in Leeds, Nick and his team will operate across our three offices, bringing additional depth and capacity to each offering. Our Leeds office has also been joined by Jeremy Scott, whose role is to build and reinforce our Regulatory team; another important component within each of our sector offerings, and here intended to meet the growing challenges of our increasingly regulated commercial environment. As always, we remain extremely keen to recruit more first-class lawyers able to improve and broaden services in each of our three offices. At the same time, we fully understand that rather than seeing these offices colonised from outside their area, those clients with particularly strong links to York, Sheffield or Leeds are likely to prefer their relationships to be led by lawyers from that particular region: lawyers with a real understanding of the intricacies and nuances of their marketplace. At the risk of turning each of our clients and contacts into unpaid recruitment consultants, I would urge you to encourage any first-class lawyers that you hold in high regard – and who you believe are held back in their current environment – to contact either myself or your own preferred contact within the firm. We would relish the opportunity to explore whether or not we might improve each other’s futures. I very much hope that you enjoy this edition and would ask that you don’t hesitate to let us know of any improvements you’d like to see, or any particular issues you’d like to be addressed in future editions.

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A heads up on the world of modern law We asked the Head of our Corporate Department, Andrew Lindsay, about joining the firm, his biggest achievements and some of his personal insights into the world of law firms and their clients. A key member of our team, Andrew is a highly respected legal advisor working with a wide range of businesses and organisations right across Yorkshire and the North of England.

Why did you join LFDT? It was the opportunity to create a corporate law department that could be distinctive from its peers. I joined from Denison Till in York about three years ago, where I previously headed the Corporate Department for a number of years, and which was extremely successful. Upon joining LFDT, I became head of Corporate, and quickly saw that in addition to our offices in Leeds and Sheffield, we had the opportunity to merge with my former colleagues in York, and create a unique offering across the Yorkshire region. As a result of that merger, we are the only commercial law firm with offices in Leeds, Sheffield and York. So we really do cover the length and breadth of Yorkshire. How do you seek to differentiate LFDT from its competitors? In a service industry, we are here to service the client – it is not the other way round. They are certainly not here for our convenience! It’s a competitive world, so we need to deliver value at every stage of every interaction with clients. I always believe that the cost of our service should be less than the benefit to our clients, and we should also strive to exceed clients’ expectations every step of the way. I want us to differentiate ourselves, by being proactive, to do a lot of our clients’ thinking for them and to bring them ideas and suggestions before they have even thought of them. I also believe that our mind-set should be focussed around building a relationship and making our clients’ businesses better, rather than merely earning a fee. If we do the first of these two things right, the last one will follow.

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What single piece of advice would you give What is your proudest achievement for LFDT? to your clients in 2015? I like to see young people who work with me do well. I would say, “don’t give yourselves an excuse that you are When they say, “I have learned such a lot on this the victim of a fragile market”. There is always business transaction”, it gives me a warm glow. I give people a out there. If your competitors are doing better than you, lot of responsibility early on, and I hope, if we have there is a reason for it. Keep asking yourselves difficult recruited them correctly, they will swim rather than sink, questions all the time, such as: “How can we do this and add value to our business as well as to the businesses better? What can we learn from our experiences? What is of our clients. happening in the marketplace? and How can we improve I notice that a lot of lawyers are quite defensive the overall service to and hang on to their our clients?” relationships with clients I think it is also important very carefully. I prefer to If your competitors are doing better to be curious about let other people make good than you, there is a reason for it. everything, to be restless, relationships with clients Keep asking yourselves difficult to be prepared to be I introduce to the firm. I questions all the time, such as: don’t think “possessiveness” disruptive and to take risks. “How can we do this better?” is a good thing for either If you keep doing the same clients or the individual thing, you will keep getting lawyers who work for them. the same results; you will So, if I can help create also be overtaken by your competitors before you have a collegiate atmosphere, so much the better. even realised it. I would like this firm to be known as an innovative It is also pleasing to see my department making and creative one. We have a very long way to go, but inroads into new sectors and specialisms. We have a everything is possible. great opportunity at LFDT to become the leading independent corporate and commercial law firm in Andrew Lindsay Yorkshire. If we continue to run that extra mile for clients and deliver value as well as service, then I see no reason why we cannot achieve it.

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Psst… let’s look at bribery and global risk Director of our Regulatory and Corporate Defence team, Jonathan Cripwell, considers global risk and its implications for UK business.

Almost four years after the Bribery Act 2010 came into force, this is our second review of bribery and corruption within UK business. Although awareness of economic crime and the damage it causes is higher than ever, corruption still poses a significant legal and commercial risk for corporations doing business around the world. The Bribery Act 2010 constituted a complete overhaul of previous UK anti-bribery law, much of which dated back to the early 1900s. Meanwhile, the US has led the way with unprecedented levels of anticorruption activity over recent years, enforced through the 1977 Foreign Corrupt Practices Act (FCPA), which underpins US legislation in this area. Operational risks For many corporations, the risks relating to bribery and corrupt commercial payments represent one of the most serious operational threats. This isn’t just in terms of the impact of regulatory investigation, prosecution and financial penalties, but also because of the substantial risk of damage to brand and reputation. On top of that – and perhaps more significantly for individual employees – there is also a risk of criminal prosecution for UK nationals, not only here in the UK but also in foreign jurisdictions where they have operated. Organisations in specific markets engaged in procuring government contracts are particularly at risk. These include defence, construction, infrastructure and healthcare, where those organisations might be competing for business. The dangers are even greater in certain high-risk countries where bribery might historically have been an integral part of how business is done. While the FCPA and UK Bribery Act are just two examples of global anti-corruption legislation, other national legislation in regions like China, Brazil, Canada and Europe aims to achieve the same objective, imposing severe penalties on corporations and individuals who resort to bribery.

For many corporations, the risks relating to bribery and corrupt commercial payments represent one of the most serious operational threats.

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The UK perspective The UK Bribery Act came into force on 1 July 2011. Prosecutions here have been relatively few compared to worldwide enforcement but it’s abundantly clear that UK prosecutions will steadily rise. This will happen as worldwide regulators and enforcement agencies increase their efforts to clamp down on corporate and financial crime. We can expect to see an increase in prosecutions of individuals in positions of responsibility within multinational corporations, for example those who have engaged in bribery both domestically and in foreign countries where their business is conducted. The global perspective PwC’s 2014 Global Economic Crime Survey reported that economic crime continues to be a major concern for organisations of all sizes, across all regions and in virtually every sector: “As our 2014 Global Economic Crime Survey reveals, the real story is not so much that economic crime stubbornly persists. The real story is that economic crime is threatening your business processes, eroding the integrity of your employees, and tarnishing your reputation” In the US, the FCPA is extensive in its territorial application. Many international companies with formal ties to the US (which includes a company that has securities registered in the US) fall within its scope, and could potentially face prosecution by US enforcement authorities. We have seen the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) fighting corruption with unprecedented levels of anti-corruption activity, increasing the number of investigations, settlements and prosecutions. This culminated in 2014 with an eyewatering $1.46 billion paid by 10 companies to resolve FCPA cases. The main UK prosecutor for offences under the Bribery Act is the Serious Fraud Office (SFO). Together, the SFO, DOJ, SEC and other worldwide enforcement agencies are increasingly demonstrating their willingness to cooperate and coordinate investigations across the globe. They are also achieving global corporate settlements following actions by the authorities in different jurisdictions. Our perspective As a firm, we are increasingly being asked to advise on the risks relating to bribery, both in terms of prevention and risk management but also at the ‘sharper end’, meaning the investigation and prosecution of clients in the UK and abroad. More and more, we are seeing investigations that have their origins in the US and which are then coordinated with the SFO and other national enforcement agencies to investigate under reciprocal bribery and corruption legislation. The result is that multinational and individual employees are being prosecuted in numerous different jurisdictions. Bribery and corruption is a serious issue within the global marketplace, and Lupton Fawcett Denison Till has a dedicated team who can guide and advise you through the complex legislation. They can also provide both commercial and practical advice on risk management. In view of the often very urgent nature of these issues, we field an emergency response team which can help you 24/7, for example by advising, assisting and representing you in the event of a dawn raid or similar corporate crisis. In circumstances like this, immediate on-the-ground access to legal and practical commercial advice can often avoid the potentially negative – and possibly disastrous – consequences of dealing with the authorities without representation. If you’d like to talk about any of these services, please don’t hesitate to contact Jonathan Cripwell on 01904 561410 or Jeremy Scott on 07971 520407.

Jonathan Cripwell

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Insolvency Practitioners – We’re here to help! Seeking the advice of an Insolvency Practitioner is often seen as a ‘last resort’ for businesses facing financial difficulties. However, as Gareth Peckett of BHP Clough Corporate Solutions LLP explains, insolvency practitioners are far from the ‘grim reapers’ they are sometimes portrayed to be. There is often a stigma surrounding Insolvency Practitioners and businesses who seek insolvency advice. However, the facts tell a different story. According to a 2010 report, the UK insolvency industry assisted businesses with a combined turnover of £363 billion and helped to save two million jobs. The UK is also rated as one of the best insolvency regimes in the world, ranking seventh out of 189 countries, by the World Bank and International Finance Corporation. The reality for many is that calling for the advice and assistance of an insolvency practitioner can in many cases benefit and save a business. However, the negative stigma of calling for the advice of a qualified insolvency practitioner continues to influence companies in financial difficulty. As a result, organisations often delay seeking the advice they need and miss opportunities, or seek advice from unregulated advisors. Both of these actions can contribute to the failure of a business that could otherwise have been saved.

If you are experiencing difficulties, it pays to act quickly and consult a licensed insolvency practitioner.

How can advice help? From helping you to deal with the loss of a major customer, to managing cash flow problems, there are a number of ways a qualified insolvency practitioner can assist your business. On initially meeting a client, my first thought is always “how can I help?” As a qualified insolvency practitioner,

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I look for the positive solutions in every set of circumstances and ask myself how I can add value to a situation. Through stimulating discussions with business owners as to the challenges faced by their business, I am able to outline the options available, with various solutions, to agree a way forward. In many cases, this meeting is a real relief for owners and directors enabling them to understand the position they are in and the options available.. Naturally, ‘when’ a business chooses to seek advice will dictate which options are available, and as a rule, sooner is better. Waiting until the last minute to seek professional advice can not only limit your choices, but also reduce your business’s chances of recovery. Recognising the warning signs Any business can have a financial crisis and no business is immune from the impact of a recession or many other external challenges. What separates the survivors from those that fail is that they often have a financial plan to minimise the potential damage to their business and to recover from any such damage. The old adage of “failing to plan is planning to fail” is particularly relevant today and quality financial information is key to your preparations. Having accurate data at your disposal can help you solve problems before they arise, identify problems and seek timely advice. While we appreciate the demands on business owners, directors and management teams are already high, the following checklist will assist you in assessing whether you are doing the right things to monitor your business, examining your ability to recognise weaknesses, and reviewing your contingency plans:

• Do you have a business plan? • Do you prepare and review regular management accounts? • Do you prepare and review annual cash flow forecasts? • Do you review business costs and overheads as well as turnover? • Do you prepare and review aged debtor and creditor lists? • Do you and your fellow directors meet regularly to review business performance? • Do you set time aside to understand your financial position? Without these measures in place, your business is unlikely to be in a position to identify and act on future problems. It is also important to watch for the warning signs that signify your business is in trouble. These can include any of the following scenarios: • You have difficulty in paying your creditors on time • Your outstanding debtors or potential bad debts have increased • You are facing increased pressure from creditors for payment • You are having difficulty paying HM Revenue and Customs on time • Creditors have commenced legal action • Your overdraft is always up to its limit • Your bank has returned cheques • Your bank has asked that its facilities be reduced • Your bank requests personal guarantees or requests that they are increased • Your bank requests additional security (e.g. a legal charge against your property) • You have difficulty in paying wages • You are not drawing money from the business yourself • You are using your own money to fund the business

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What to do if your business needs assistance? If you are experiencing difficulties, it pays to act quickly and consult a licensed insolvency practitioner. Calling in the professionals at an early stage could mean the difference between business failure and survival. BHP Clough Corporate Solutions LLP offers free initial consultations with one of our fully licensed insolvency practitioners. All discussions and consultations are treated as strictly private and confidential. A case in point. We were approached by the directors of a limited company with 65 employees. The company services the construction industry and had suffered setbacks in recent years, and as a result, its facilities were reviewed by its bank and reduced to a level that left the company unable to service its debts. The company had subsequently fallen behind with its payments, and found itself presented with a winding up petition from HM Revenue and Customs and debts of around ÂŁ800,000. We helped the company to negotiate with key stakeholders, including the bank, secured lenders, HM Revenue and Customs and trade creditors. We then established proposals to facilitate a payment to creditors over a 5 year period in full and final settlement of their debts. A Company Voluntary Arrangement was agreed, which allowed the company to retain its workforce. HM Revenue and Customs ultimately withdrew its petition to wind up the company, allowing the business to continue. In the current period of economic uncertainty, businesses in every sector face challenges. By ‘keeping a tight rein’ on your finances, planning ahead and ignoring the stigma around seeking advice, you can give your business the best possible chance of staying on track.

Gareth Peckett

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Energising Yorkshire entrepreneurs Lupton Fawcett Denison Till’s Director Dan McCormack looks at how our exciting Business Advantage Scheme is promoting entrepreneurship and helping high-flying start-ups across the region.

There’s no doubt that ‘entrepreneurship’ is a buzzword of the current era. Asked what their ambitions are, many of today’s students reply that they would like to have their own business or that they see themselves as a ‘serial entrepreneur’, when once professions like teaching, medicine or law would have been more common. A few figures on UK businesses Let’s consider some interesting statistics. Here in the UK, large businesses are classed as those with more than 250 employees, and they account for less than 0.1% of all business enterprises. Meanwhile, more than 99% of all businesses – 5.2 million in total – are classed as small and medium sized enterprises, or so-called SMEs. If we break that down still further, 96% of all businesses are what we call ‘microbusinesses’: businesses employing just 0-9 employees. Between 2013 and 2014 the number of micro-businesses increased by 7%, together employing nearly 8.3m people with a combined turnover of £655 billion. Even though small businesses make up 99% of all business in the UK, they account for just 12% of firms engaged in international trade. The European Commission’s SME Performance Review describes the UK as having “a very competitive environment for SMEs compared to other EU member states. With a positive outlook with increases expected in the number of SMEs, employment and value added”. Overcoming challenges Lupton Fawcett Denison Till is already the law firm of choice for many SMEs, and for good reason. Our aim is to help entrepreneurs increase the wealth generated by their businesses and then help them to protect that wealth. Many of our clients are recent start-ups, falling squarely within the ‘micro-business’ category. Of those, many are businesses

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in the formative stages of their evolution, when money is especially tight and when a single decision can have a fundamental impact on how that business develops. The UK Government recently trumpeted the passing of the Small Business, Enterprise and Employment Act, designed to make the UK the best place in the world to start and grow a business. The Act is wide ranging, and it paves the way for businesses to get improved access to finance, including creating fairer provision for tied pub tenants and ending exclusivity clauses in zero hour contracts. Forcing banks to share credit data and improve access to finance for small businesses has been a laudable move, but in reality we expect the Act to have minimal impact on the majority of SMEs in the UK. In our view, it is far more important for a young and growing business to employ the right staff and identify the right market for its goods or services. We also think it’s vital that new businesses retain the best advisors: people who understand how businesses work and invest the time it takes to really get to know a business owner, their ambitions and their preferred way of working. How we’re helping Yorkshire’s entrepreneurs Lupton Fawcett Denison Till have recently partnered with Leeds Beckett University to provide six Business Advantage Awards, offering a £5,000 package of legal and mentoring support to each winning business. The winners come from varied business sectors and will gain access to one-to-one enterprise mentoring support from a solicitor with expertise in the relevant field required by the business. Here, specialist subject areas include IP protection, advice on business structures, taxation, HR conditions and employment terms, premises advice and regulatory compliance. Our firm also has an extensive network of industry contacts and access to other specialist expertise, all of which we’ll be making available to the award winners.

The 2015 Business Advantage Scheme Award winners are: Achille Traore Achille is Chief Executive at Leeds Digital Hub tenant TopScreen Media, which specialises in providing technology and consultancy to improve companies’ customer engagement. The firm has recently won a major contract with New York’s World Trade Centre to help create its digital strategy. Emma Koczy Psychology student Emma is the founder of Atlas Insight, a business providing intelligent insight to some of the biggest oil, gas, engineering and power companies across the globe. Karl Lenton and Claire Shepherd Karl and Claire run Safe Offender Healthcare (SAFE), which supports organisations in the health, prison and social care sectors by helping them develop strategies, improve services and patient outcomes, and reduce deaths in custody. The company is currently working with prison and social care services, the NHS and various patient groups to rethink environments for vulnerable people. It’s currently launching a mobile treatment unit into the Prison Service. Tom Martin Tom is the founder of JetSoft, a company developing software to change the way material test data is archived and analysed in the aerospace industry. Martin Woods Martin is a Director at Leeds-based search engine optimisation (SEO) consultancy, Subpixel – a team that helps businesses to resolve issues affecting traffic from search engines. The company is looking to launch a software product called SpamFlag, designed to help people deal with Google penalties and spam. Tam Owen Tam is a BA (Hons) International Business student who recently launched his new company, Nutrition2go. The business aims to provide healthy vending machines using state of the art touchscreen technology.

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The thinking behind Advantage The idea for the Advantage Scheme came after the firm heard about the Enterprise & Innovation Hub set up by Leeds Beckett University. Over the past 10 years the Hub has supported over 600 emerging businesses at a number of affordable office locations across West Yorkshire. Award winners will be mentored in conjunction with the University, so they’ll receive advice, reasonably priced accommodation and access to the business and professional networks of both the University and Lupton Fawcett Denison Till. Through this award scheme, Lupton Fawcett Denison Till is helping support the next generation of high-flying entrepreneurs, playing a vital part in creating the stars of the future while supporting job creation and growth within the local economy. We will be pleased to hear from any micro-businesses and start-ups that think they might deserve a future Business Advantage Award. Those wishing to be considered on a confidential basis should contact Dan McCormack via email

Dan McCormack

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For those of you who don’t know, some HR and Employment Law consultancies offer fixed-fee employment support backed by an insurance product. The big selling point here is that as well as providing HR and Employment advice, these consultancies will also defend any employment claims brought against your business. Better still, if the consultancy loses your case, they will pay the compensation, not you. Sounds impressive, doesn’t it? Actually, we don’t think so, and we think you need to be aware of exactly what you are signing up for. Here’s a list of some key points to be aware of:  ost of these advisors are not legally qualified, •M so they don’t have the necessary skills, experience and expertise to look after you properly. Also, advisors at these consultancies lack commercial awareness of what businesses are trying to achieve, and that’s another reason their support is likely to be inadequate or unsuitable. • C onsultancies like these typically use flowcharts to advise their clients, relying heavily on a scripted ‘one-size-fits-all’ approach to their client work. This means their advice may well be inappropriate for dealing with the very specific needs of your business. • As the advisors are usually not legally qualified, their advice is not covered by legal privilege, which means that all of their communications with you are ‘disclosable’ during litigation. In other words, if one of your employees brings a claim against you,

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Look out for some HR and Employment Law consultancies

he or she is entitled to see the advice that you received from the advisors.

Andy Gilchrist, a Director and Head of Employment here at Lupton Fawcett Denison Till, has a stark warning for anyone considering using the services of some so-called ‘specialist’ HR and Employment Law consultancies.

• I t’s almost impossible to build a trusting and lasting relationship with an advisor, as you rarely meet them face-to-face, dealing instead with whoever picks up the phone (which is often a different person each time). • L ast but not least, as employment litigation has reduced by around 80% since the introduction of fees, there is much less need for an insurancebacked product. As well as all of the points above, there’s You need to be a more fundamental aware of exactly reason why the advice what you are of these consultancies signing up for. is flawed from an employer’s point of view. What they don’t tell their business clients is that they typically advise in an extremely conservative way: by this, I mean an employee friendly way rather than an employer friendly way. This means that there are very few, if any, claims. While on the face of it few claims sounds good to some businesses, there’s more to this than meets the eye. In reality, few claims simply means that the employer is not actually doing anything which may result in a claim. Or, in other words, the employer is in fact doing everything the employee wants.

A typical example of this situation – and how it works against employers – would be an underperforming employee or an employee with a bad attitude. Although the employer will usually want to resolve the problem quickly and in a costeffective or ‘commercial’ way, these consultancies will generally advise the employer to go through an extremely lengthy and time consuming performance management process, and even then will be reluctant to advise to dismiss. An employer will have no option but to follow the consultancy’s advice, otherwise the consultancy won’t cover the cost of litigation. Essentially, these HR and Employment Law consultancy services are exploiting employers’ nervousness of litigation and its costs in order to sell their product. The reality is that due to the introduction of the fee regime, there is very little litigation for businesses to worry about. On top of this, most cases settle relatively early on, so a large legal cost occurs only very rarely. If this sounds familiar, or if you’re about to embark on a ‘relationship’ with one of these types of consultancies, please talk to us first, as most of our clients spend less with us than they would do with these consultancies, and crucially they receive the advice and service they want.

Andy Gilchrist

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Darren Carter

The regulations are designed to protect consumers who buy goods or services from your business, and they cover sales in a wide range of channels, including:

In-store sales: If you sell goods or services in-store, you are required to include the following information at the point of sale:

• • • • •

•A  n accurate description of the goods or services sold, which clearly outlines the characteristic of each. •Y  our contact telephone number and address, and the total price of the goods.

sales by mail order sales over the phone online sales door-to-door sales in-store or over-the-counter sales

The detail behind retail

In addition to this, if goods are to be delivered, you must meet the agreed delivery date within 30 days of the date of the contract (unless another delivery period is agreed). Sales via your website, by phone, through the post and on the doorstep: •Y  ou must advise your customer, in writing, that they have a right to cancel the contract for a period of 14 days. If you don’t inform your customers about their right to cancel, the cancellation period will automatically be extended to 12 months. You should note that these cancellation periods don’t apply if you supply bespoke goods or perishable items. • I f you sell services, your customer has the right to cancel the contract for those services. In these circumstances, where you are authorised to commence the provision of the services during the cancellation period, a customer must be specifically advised that they will become liable for your costs if you continue to provide services up to the date of cancellation.

Senior Commercial Solicitor, Darren Carter, asks whether your consumer contracts are up to date, because you could be breaking the law if not. Under the Consumer Contracts (Information, Cancellation and Charges) Regulations 2013, retailers must offer consumers clear information at the point of sale, whether that’s in-store, online, on the doorstep or over the telephone.

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•Y  ou must also advise your customers if they are to be responsible for paying the cost of returning unwanted goods. Customers must actively indicate that they are aware of these costs, or other additional costs, for example by clicking on a button to acknowledge that the payment will be due. Under the regulations, failing to provide the customer with the correct information is a criminal offence, so it pays to ensure your retail practices are compliant. If you’d like to discuss your current approach and policies with our experts, please contact Darren Carter on: 0113 280 2087, or email him at

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Social enterprise never tasted so good Duncan Milwain is a Lupton Fawcett Denison Till Director and head of our Charities and Social Enterprises Group (CSEG). Here, he gives us a fascinating glimpse into his professional and personal involvement with a groundbreaking social enterprise transforming wasted food into much-needed (and mouthwatering) meals.

If you had predicted two years ago that by mid 2015 I’d have established a social enterprise that involved running a café, I would have laughed. If you’d said that its two core principles were to use only ‘waste’ food and to allow customers to pay what they wanted, then I’d have thought you had lost all sense! In actual fact, you would have been right on both counts.

but they all sign up to an agreement committing them to supporting the movement’s key concepts. My role quickly evolved from being the legal advisor to dealing with a whole range of queries. Some issues were legal, others practical, as TRJFP began dealing with national and international media organisations, political groups and large corporates, primarily in the food sector. Out of this came the development of a charity designed to promote and support education in the field of food waste – TEJFP Charitable Foundation – which I became a trustee of. Lupton Fawcett Denison Till has been very supportive from the outset, taking a flexible and open approach to accepting my continued role as a director of the firm on a part-time basis. This support enabled me to develop The Shipley Food Project CIC social enterprise and, in December 2014, open Saltaire Canteen: a café in the World Heritage Site operating on the principles of TRJFP. The Canteen now opens 6 days a week with 3 full-time employees. Since opening, we’ve intercepted over 9 tonnes of food that would otherwise have gone to waste. Our food currently comes from wholesalers and a local market, and we recently won the support of a major supermarket who are trialling working with us. We use this food to serve meals at the Canteen as well as produce hot meals for a food bank we run, a local job club, and for a monthly dinner for 70 asylum seekers. Central to what we do though, is to confound expectations of what ‘waste food’ actually is. We have two fantastic chefs and many eager volunteers who together, enable us to produce inventive, varied and flavoursome food. A typical recent menu included butternut squash soup, lamb moussaka, mushroom risotto, aloo gobi with spiced parsnip crisps

I’ve provided my legal knowhow and, in return, gained practical experience of being a trustee – experience that helps when advising.

It was responding to an email in autumn 2013 that led me to where I am now: part lawyer, part social entrepreneur. The email came from Adam Smith, a young man determined to reduce the amount of food that goes to waste. Then in Australia, Adam’s initial email asked for advice on setting up a social enterprise. He had – and still has – a desire to “really feed the world”, but he’d been advised to start in his own backyard, Leeds. So, with advice from me on the legal structure, Adam then established The Real Junk Food Project (TRJFP) in December 2013. The first ‘Pay As You Feel’ café opened in Armley shortly after. I’ve been advising charities and other third sector organisations – sometimes called social enterprises – for over 20 years now, acting as trustee of various organisations for many of those years. I’ve provided my legal know-how and, in return, gained practical experience of being a trustee – experience that helps when advising. Following the creation of the first café, what I hadn’t expected was quite how quickly the idea would spread, through West Yorkshire, the UK and even internationally. There are now over 60 cafes running on these principles, as far afield as Berlin, Israel and Cape Town. Each café or group of cafes is independent,

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and chicken Caesar wraps, together with cake and excellent coffee. There are parts of running a small business that involve dealing with personnel, administration, tax and property issues as well as specific matters relating to food supply and media. For example, I hadn’t anticipated doing a last-minute live interview on the main Russia Today TV channel! There have also been issues specific to third sector organisations – like dealing with volunteers and considering funding streams –which I’ve been able to adapt and implement in my client work. One particular theme is the concept of cross-subsidisation. A social enterprise needs to generate an operating surplus to be viable long term, so parts of such an organisation should produce funds that can then be used to support parts not expected to generate income. There are aspects of the business that are unique. We want to radically change the levels of food waste and, by doing so, expect to put ourselves out of business within about five years. This is not a model I’ll be expecting other clients to adopt! As for the future, through a joint venture with a Bradfordbased charity we’ve now obtained a licence to occupy a 5000sq foot warehouse in central Bradford. From here we’ll receive a greater volume of food from across the district, and using the cross-subsidisation referred to above, we’ll be able to support a whole series of similar Pay As You Feel cafes across Bradford. The majority of these will be in areas of significant urban deprivation. Involvement with the project has given me a rounder, more hands-on experience of life as a start-up enterprise where I’ve had to act effectively in various roles including in-house lawyer. I really hope this widened perspective will be reflected when advising others. It’s been an exciting and surprising 18 months since that first email but I’m confident that in another 18 months we’ll be significantly further on in our quest to “really feed the world”.

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Plotting the right route for company directors One aspect of the financial difficulty that a company may face, and which can be often overlooked, is the duty of directors in such situations and the legal implications of them taking one particular course of action over another.

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A Lupton Fawcett Denison Till Periodical. Issue 5

Being in the eye of a financial storm is a difficult and stressful position for any director to be in. It is therefore of crucial importance to adopt a rational approach to all matters and to carefully explore the legal and commercial implications of taking certain decisions. The period in question prior to the failure of a company is often referred to as the “twilight period”. This is the period of time ending with formal insolvency proceedings, during which transactions entered into by a company, or decisions made by directors, are vulnerable to subsequent attack by an insolvency practitioner. These decisions may also give rise to personal liability on the part of the directors and/or others involved in the management of the company. Under normal circumstances, a director has a statutory duty to act in a way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. However, it is during the period when a company is insolvent that this duty is displaced and at that moment, directors must exercise their powers and discharge their duties in line with the interests of creditors of the company. Apart from the statutory penalties of wrongful trading and fraudulent trading, directors can also be caught out in numerous ways, including: fraud in anticipation of winding up transactions, defrauding creditors, falsification of books and records, destruction of books and records, falsification of representations to creditors, misfeasance and breach of fiduciary duties to the company and creditors as a whole.

Furthermore, during this period of time, incurring further credit in the company’s name will be subject to substantial scrutiny, once formal insolvency proceedings have commenced. If incurring that credit doesn’t worsen or prejudice the interests of the creditors of the company as a whole, then generally speaking that may not be subsequently impeachable. However, careful consideration needs to be applied to each decision. It is against this backdrop that directors owe it to themselves to take prompt and sound advice in relation to all the legal aspects arising from a company facing insolvency. In fact, failure to seek guidance may easily land directors in a far worse situation. The director who takes sound professional advice and minutes his reasons for taking a particular course of action will find himself in good stead should his actions be subsequently challenged post insolvency. Needless to say, it is not only formally appointed directors who can be subject to these considerations. De facto and shadow directors, i.e. those who act as directors in everything but name are equally liable to attract the attention of an insolvency practitioner following a formal insolvency. Another consideration for directors of insolvent companies is the potential for disqualification for acts undertaken in the ‘twilight zone’. If the director’s conduct has been such that it is in the public interest that he or she should be disqualified, then the Secretary of State can make an application to court seeking a disqualification order. Alternatively, they may invite the director to offer an undertaking not to act as such for an agreed period of time.

Failure to seek guidance may easily land directors in a far worse situation.


Interestingly, in a move to modernise and strengthen the directors disqualification regime, there have been some recent amendments to the Company Directors Disqualification Act 1986. One of the new, and most notable, provisions is that the Secretary of State can not only seek an order from the court banning a director from acting as such, but also for a compensation order to be made against the director. A director may also be required to give an undertaking to the same effect i.e. that a sum of money is paid for the benefit of a certain creditor or class of creditors, or to make a general contribution to the assets of the company. Rogue directors in the past have seen disqualification orders as an occupational hazard. However, now that the compensation provisions are to be enacted, the Secretary of State has a further set of teeth to deal with poor conduct on the part of directors. The provisions of the Small Business Enterprise and Employment Act 2015 in relation to the Company Directors Disqualification Act are in force and the regulations determining the operation of compensation orders and undertakings have been in operation from 1 October 2015. The new rules only apply to conduct after this date, so the new regime will take some time to bite, however we feel that directors of failed companies will be facing a harsher regime than hitherto. This regulatory change should certainly make directors reconsider their conduct and action.

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Lupton atticus journal issue 5 aw lr  

Lupton Fawcett Atticus issue 5

Lupton atticus journal issue 5 aw lr  

Lupton Fawcett Atticus issue 5