Friday 21 December 2012

The importance of drafting an effective break clause

In today's market, commercial property tenants are continually looking for a better deal to protect their future business interests. A business can change significantly over a small period of time therefore tenants need peace of mind that they have a ‘get out clause’ if ever needed.

What happens when a tenant is tied into a lease for 10 years or more, but their business has changed causing them to move premises or even cease trading? You will often find that a carefully drafted lease will include a break clause, enabling the tenant to bring the lease to an end part way through the agreed term.

When I was asked to draft a break notice for a tenant halfway through the term of the lease, I thought it would be a relatively simple task, taking only a small amount of time. However, when I realised what was at stake for the client, I knew it wasn’t a straightforward task.

The consequences of an invalid break notice can cause the tenant to be tied into the current lease for the remainder of the term, or until the next break date (if there is one of course – there may not be!). This has huge cost implications for the tenant, particularly if they have already agreed to a new lease at different premises. A tenant could face paying rent on two premises for a period of five years plus - not the situation the tenant's lawyer wants to be faced with!

Even when a lease has a break clause, oversight of a minor point can cause the tenant to be tied in for the remainder of the term. For example, a break clause may insist on vacant possession, therefore, if any items are left behind (even a desk), the tenant may still be tied to the lease. Therefore, if you are the tenant or the landlord, a carefully drafted break clause is extremely important. A poorly drafted break clause could break the tenant's business.

The commercial property group at B P Collins LLP can assist commercial tenants and landlords with negotiating, drafting and implementing break clauses. If ever a tenant or landlord finds themselves in the sticky situation where they have a fight on their hands in relation to service of the break notice, the property litigation group has specialist knowledge in this area too and are on hand to advise. 

Posted by Gemma Hunter, trainee in the property practice group.

Gemma Hunter -

Gemma started her training contract with the firm in October 2011 having studied Law and Criminolgy LLB at the University of Sheffield and the LPC at the College of Law, Bloomsbury.

Monday 19 November 2012

Whose social network is it anyway?

Social media has changed the world we live in.  It's not just the daily scandal about what some premiership footballer said on Twitter.  Social media has changed business too. In one of the most hyped IPOs (Initial Public Offering) in years, Facebook went public. Investors went mad. Suddenly though, Facebook was worth half what it was a year ago (poor old Mark Zuckerberg, eh?).

Social media is changing the society we live in too.  If you believe some people (my Grandad), then Facebook / Twitter / Blackberry Messenger (they're all the same, aren't they?) actually caused the riots in the UK last year.  It's the pinnacle of the downfall of society!  The fall of Rome!  Why doesn't anyone write a letter anymore?

The debates are endless and the issues virtually limitless.  I just want to focus on one small area and that is how social media can affect an employment contract.

For example, many employees have a LinkedIn profile.  Some even use it.  A minority might even use it as they're supposed to. They establish connections and a network of contacts for the benefit of the employer's business.  Great?

There is, however, a problem.  What happens when the employee leaves?  What happens to all those great connections and the network of contacts?  Many businesses (some say all) are based on those personal relationships and connections.  It used to be just weirdos who contacted strangers online.  For many business professionals it's now a part of everyday life.

But is there not some inherent value in those personal relationships?  If an employee has been using LinkedIn as part of their job, in the course of employment for the purpose of furthering their employer's business, who "owns" those connections?  Who "owns" the social network (see what I did there)?

Social networks have a value to any business that uses them.  For employers, one way of protecting that value is through a properly drafted employment contract which addresses social media.  There's no point ignoring it, after all.

Posted by Simon Hall, trainee in the employment law practice.

Simon Hall -

Simon started his training contract in January 2012 and his experience includes working on shareholder and director disputes, contractual disputes, personal insolvency and consumer claims. 

Monday 15 October 2012

Osborne proposes employee share schemes

The season for political party conferences is upon us once again and the Conservative party took to the stage in Birmingham to showcase its policies for the coming political year.

During his speech on the economy the chancellor, George Osborne, outlined proposals for employees to be given between tax-free shares in exchange for giving up some of their employment rights.

The idea is that the employee will give up his right to claim unfair dismissal, a redundancy payment and a request for flexible working in return for between £2,000 and £50,000 of shares in his employer company. Furthermore, female employees may have their maternity rights reduced. Mr Osborne proposed that companies could make such a scheme mandatory for new employees.

Employee share schemes are not a new concept. Successive governments have always sought ways to encourage companies to grant options and shares to their employees, particularly through favourable tax treatment.

In the late 1980s employee benefit trusts (EBTs) were popular as they minimised corporation tax, National Insurance contributions and income tax, and could provide benefits to employees and, in some situations, former employees and employees' dependants.

However, EBTs are now seen as being too tax advantageous and the government currently favours enterprise management incentive (EMI) schemes. EMI schemes are often used by small, higher-risk trading companies. Under an EMI scheme, a company grants options to employees who can then purchase shares at a set price within a specified timeframe.

Both the company and the employees who benefit from the scheme must meet certain criteria, for example, the company's gross assets must not exceed £30 million, and an employee holding options must spend at least 25 hours a week or 75% of his working time on the business of the company.

As a trainee undertaking my first seat in the corporate and commercial practice group here at B P Collins LLP, I recently worked on a matter involving an EMI scheme. In this particular matter two employees were exercising EMI options to become shareholders, and then further options were being granted to them and several other employees.

I drafted exercise certificates, new option certificates and board minutes (yes, the LPC did come in handy here!) and filed information about the new shares at Companies House. The employees who exercised their options became shareholders and I helped amend a shareholders' agreement for them to enter into with the existing shareholders.

While working on this matter, the advantages for both the company and its employees became clear to me. The shareholding employees receive equity in the company, motivating them in their work because if the company succeeds they will get a better return from their shares. The company gets a more motivated and dedicated workforce which it benefits from. And both parties may get some tax relief.

I have keenly watched the press take hold of Mr Osborne's recent proposal; it has faced a myriad of responses, many of them critical, and despite the advantages of option schemes it is easy to see why. Although an employee will receive equity in his employer company, he is unlikely to have any controlling influence in the company; in fact he may not even get voting rights with the shares he is given.

Furthermore, the value of his equity is, of course, dependent on the success of the company which is less than certain in this current economic climate. And, given this climate, giving away employment rights on dismissal may not be advisable, when dismissals are more likely to occur!

Companies already use employee share schemes as an incentive in recruiting, retaining and motivating employees. Such schemes also help to bring the interests of a company's shareholders into line with those of its employees.

But are employer companies now likely to give away shares if they do not already do so? Small businesses, especially those which are family-run may understandably be reluctant. The potentially necessary complex and costly shareholder arrangements and tax provisions will be off-putting to many, but for some companies, the cost of using an employee share scheme will now be offset by the ability to get rid of employees more easily.

While the debate about the economic consequences of George Osborne's proposal and the morality of taking away employment rights from employees continues, it is worth bearing in mind that an employer may want to use an employee share scheme even if Mr Osborne's proposals don't get much further than his speech at the Tory party conference.

If you are thinking of setting up an employee share scheme or need some advice in relation to your or your employees rights, B P Collins LLP will be happy to assist you so do get in touch.

Posted by Harriet Betteridge, trainee in the corporate and commercial practice.


Harriet started her training contract in September 2012 having previously worked in the Litigation team as a paralegal. Her previous experience includes working at a group of law centres in south London and in the Legal, Compliance and Risk team at the Charities Aid Foundation.

Monday 3 September 2012

The personal side of the law

I wanted to experience a substantial amount of client contact as a trainee and, in my Private Client seat, I am getting that and more. Given the nature of the work, clients discuss with us, in confidence of course, their finances, hopes and dreams, health and views on their family and friends. My typical week involves dealing with wills, tax planning and estate administration matters. As straightforward as these tasks sound, there are often moments of great amusement – that’s the beauty of being in a practice group with so much client contact. 

I was instructed by a lady to draft her will so that, in the event she died first, her husband’s new wife could not benefit too much from her money.  That, in my opinion, is a valid concern and one I had not considered before that meeting.  I have drafted deeds of appointment distributing enormous amounts of money to beneficiaries of trusts, registered a death, assisted in making a claim against the beneficiaries of an estate and assisted in defending an estate against a claim. 

On the tax planning side, I have attended meetings where the benefits of trusts and, in particular, discretionary trusts are discussed. The person “settling” the trust (the Settlor) gives assets or money to a group of people (the Trustees) to hold on trust for a defined group (the Beneficiaries). Trustees are bound by numerous duties including a duty to act fairly, use reasonable care and skill when they act and comply with the terms of the trust. On the other hand, the trustees of a discretionary trust have discretion as to how the assets of the trust are applied for the benefit of the beneficiaries and how the trust is administered. 

I learnt that, aside from the obvious ways of revoking a will (including my personal favourites of burning the will or ripping it up), unless it is apparent that a will was made in contemplation of the marriage and it is clear the will was not intended to be revoked by the marriage, marriage too can revoke a will.

Also, after marriage, it is easy to presume a surviving spouse would inherit everything if a married person dies without leaving a will (they die intestate), but that isn’t true. The surviving spouse would inherit all the chattels, a statutory legacy of £450,000 and half of the estate after all legacies and liabilities have been discharged. The other half of the net estate would pass to the deceased's parents (or siblings or sibling's children). If the deceased had children, the surviving spouse inherits even less, regardless of whether the children are those of the surviving spouse. Surviving spouses may have to sue family members in order to gain control of assets – awkward does not even begin to describe a family dinner in those circumstances.

Actually, Private Client is personal, technical, quirky and fun.  So, if you need to speak with a solicitor about planning for the future, contact our Private Client practice group.

Posted by Araba Amissah-Arthur, trainee in the private client practice.

Araba Amissah-Arthur -

Araba joined the firm as a trainee in September 2011. She graduated from the University of Warwick with a BA (Hons) in Politics and International Studies and completed the Postgraduate Diploma in Law and the Legal Practice Course at BPP Law School in London. She then worked as a consultant in a national Employment Tribunal representation service for three years.

Monday 6 August 2012

A lucrative roof over your head?

The Olympics have officially arrived!  In the UK we love athletics!  Or that is what the media would have us think.  But, to me, their attempts to convince us that people in this country actually care about athletics fly in the face of all recognised research (i.e. a quick poll amongst my friends and reports that the UK is the most obese nation in Europe).  People seem more concerned with the traffic problems the Games will cause…    

However, all jokes aside, there is no denying that the deluge of tourists pouring into the nation’s capital will bring a massive economic benefit.  Some people have been quick in seeking to capitalise on this opportunity. 

The BBC reported in May 2012 that many tenants in east London were being evicted from their homes with little or no notice by their unscrupulous landlords in readiness for wealthy tourists seeking accommodation close to the Olympic arena. Properties typically rented for £350 per week were being marketed for £6,000 per week.

Of course this behaviour is deplorable and potentially illegal.  Evicting a tenant without proper notice – or harassing tenants – can lead to a maximum custodial sentence of 2 years.  It is important for both the tenant and the landlord that their respective rights are properly protected and a well drafted tenancy agreement or lease will ensure this is the case.  The residential property group here at B P Collins LLP can provide bespoke leases for its clients and advise on all of the associated issues, including the procedure under the Housing Act 1988.

Commercial tenants may also want to participate in similar, less condemnable, behaviour by subletting their properties to retailers for the duration of the Games.  The permission of the landlord may be needed (to avoid forfeiture of the lease or a claim for damages) but often, if it is needed, consent cannot be unreasonably withheld and the activity can prove lucrative for a tenant.  The commercial property group at B P Collins LLP has much experience on advising on short term leases, both inclusive of rent or those based on turnover rent, and on licences to occupy on a short term basis.

Whether a commercial or residential premises owner, make sure you play fair during the Games this summer.

Posted by Matthew Crockford, trainee in the property practice.

Matthew Crockford -

Matthew started his training contract with B P Collins LLP in January 2012. He graduated in 2010 from The University of East Anglia with a 2:1 (Hons) in Law before moving on to the Oxford Institute of Legal Practice to study the LPC, achieving a Distinction. In his spare time Matthew enjoys playing football (mostly 5-a-side) and watching Tottenham Hotspur FC whenever possible.  Interestingly he used to be in a heavy metal band, but grew out of the idea!

Tuesday 31 July 2012

The legal hurdles of the Games

Unless you have been in outer space for the last 7 years, you will be well aware that the Olympics began with a bang last weekend. Whether you see them as a fantastic opportunity to showcase the UK, or an expensive inconvenience, they give rise to a number of legal considerations.

We have all been invited to 'join in' with the Olympics. However, one Staffordshire florist found out the hard way that the party comes with strict doormen. Trading Standards officers ordered her to remove a window display depicting the Olympic rings as it was a breach of trademark. A similar fate befell an elderly lady who knitted a doll for sale at a local fĂȘte as the doll was wearing a top displaying those same rings. As you can imagine, sections of the national press were up in arms!

While these are more extreme examples of intellectual property protection, every corporate client will have some form of intellectual property to protect: from brand logos (such as the rings), to inventions and industrial processes. The corporate and commercial practice are able to offer advice on both how to protect newly created intellectual property rights and to assist with assigning or licensing pre-existing rights. Should your intellectual property rights be infringed, our litigation and dispute resolution lawyers are able to assist with enforcing them.

The Olympics also raise important employment considerations. In spite of the debate over the ticket distribution, it turns out that some people actually have tickets for Olympic events. Even those who weren't so lucky may have volunteered as 'Gamesmakers', or might be planning to watch certain events at home. This will cause employers headaches as they try to deal with a large number of employees requesting annual leave during the same period. It is important to formulate a plan in advance of the event, such as whether to give priority to employees who are working as volunteers, those with tickets to events or those who submit their leave requests first.

Similar considerations arise (albeit on a smaller scale) for large local or national events such as international football tournaments, race meetings and annual music festivals. It is important to ensure that you have well drafted policies in place to deal with events which can cause disruption to the operation of the business. These range from flexible working or home working policies, through to disciplinary policies in respect of unauthorised absences. Our employment lawyers are well versed in advising clients on the best approach and drafting the appropriate policies.

Now all that's left to do is sit back, relax and cheer on Team GB!

Posted by William Key, trainee in the litigation and dispute resolution practice.

William Key -

William started his training contract with B P Collins LLP in January 2011. He graduated from the University of Leicester obtaining first class honours in Law, before undertaking the LPC at Nottingham Law School gaining a distinction. Outside of the office his interests include supporting Coventry City FC, cricket, snowboarding and travel.

Monday 30 July 2012

Welcome!

Dear readers

Welcome to our new blog! Entitled 'The Insider', it is written exclusively by our trainee lawyers. This blog will showcase their career development within the firm and post their monthly opinions on such themes as life as a trainee lawyer and recent cases in the legal world.

B P Collins LLP has a reputation for delivering high quality trainee contracts due to the 'hands on' nature of legal work that they are exposed to. As such, all our trainees demonstrate a real passion for the law and this platform allows them to express their personality through writing and provide insight to future trainees who are considering a career at B P Collins.

We hope you enjoy reading this unique perspective on the law and about the services we provide. Please email any feedback on The Insider to me at jacqui.symons@bpcollins.co.uk.

Jacqui Symons
HR Manager
For and on behalf of B P Collins LLP