Insight Article Archives

Can you obtain an Emergency Power of Attorney?

Posted on November 16, 2023 - 2:10 pm by Penny Dewar

the words estate planning spelled out in letters for our court of protection article

Accidents and illness can strike at any time, not just later in life, and at times, this can result in an individual losing mental capacity and the ability to make their own decisions. In such cases, the UK’s Court of Protection steps in to protect the interests of these vulnerable individuals and make important legal decisions on their behalf.

In this comprehensive guide, we will explore the role of the Court of Protection, the appointment of deputies, the concept of mental capacity, and the process of making legal decisions.

Understanding the Court of Protection

What is the Court of Protection?

When circumstances lead to individuals losing the mental capacity to make their own decisions, the Court of Protection comes into play. The Court of Protection is a specialist court in England and Wales which safeguards the interests of vulnerable individuals who cannot make decisions about their finances, compensation, health, and welfare. It was established under the Mental Capacity Act 2005 and has the authority to make crucial decisions for these protected individuals.

The Powers of the Court of Protection

The scope of the Court of Protection’s powers is extensive. They cover various aspects of decision-making and the protection of vulnerable individuals. Some of the critical roles of the Court of Protection include:

Assessing an individual’s mental capacity to make decisions
Appointing Deputies to act on behalf of protected persons
Granting permission for one-off decisions on behalf of protected persons
Making decisions regarding statutory wills or gifts
Determining cases involving deprivation of liberty under the Mental Capacity Act 2005

Mental Capacity and Its Implications

Defining Mental Capacity

Mental capacity refers to an individual’s ability to make sound decisions about not just their everyday life but also about life-changing matters while understanding the implications of those decisions at the time. According to the Mental Capacity Act 2005, a person lacks mental capacity if they cannot make decisions “because of an impairment of, or a disturbance in the functioning of, the mind or brain.” Therefore, under the Act, if a person cannot understand information, use it to reach a decision, or communicate their decision, they are considered to lack mental capacity.

Reasons for Lack of Mental Capacity

There are various reasons why someone may lack mental capacity, including old age and dementia, extensive learning difficulties, serious illness, and personal injuries. Serious injuries, especially those affecting the head or brain, can lead to a loss of mental capacity. In such cases, the Court of Protection may appoint a Deputy to decide on behalf of the individual during legal proceedings or following a compensation payout. The lack of mental capacity can be temporary or permanent.

The Appointment of Deputies

What is a Deputy?

The Court of Protection can formally appoint an individual as a Deputy to make decisions on behalf of a protected person. A Deputy acts as the legal representative for the protected person and carries out their responsibilities under the Court’s Deputyship Order and the Mental Capacity Act 2005.

Deputies can be close relatives, such as spouses or parents, or professionals, such as solicitors (like RIAA Barker Gillette or a court-appointed panel deputy).

The role of a Deputy is crucial in managing the financial and welfare affairs of the protected person.

Types of Deputy Applications

There are two main types of Deputy applications: property and financial Deputies and health and welfare Deputies. Property and financial Deputies handle matters related to financial decisions, such as selling or buying property, claiming benefits, and meeting all other aspects of the protected person’s financial needs. Health and welfare Deputies decide where the person lives, their daily care, medical treatment, and care arrangements. The Court of Protection specifies the scope of a Deputy’s authority in the Deputyship Order.

The majority of Court of Protection applications relate to property and financial affairs. Generally, the Court considers healthcare professionals best placed to make decisions on behalf of a protected person. Therefore, a health and welfare Deputy is usually only appointed to decide about a specific issue or a series of linked welfare decisions.

Roles and Responsibilities of a Deputy

Once appointed, a Deputy has a range of responsibilities and duties to fulfil. Some of the critical roles and responsibilities of a Deputy include:

making financial decisions and managing the protected person’s property and financial affairs;
ensuring the protected person’s financial needs are met, including paying bills and providing for dependents;
making decisions regarding the protected person’s health and welfare, including care arrangements and consent to medical treatment;
regularly assessing the protected person’s mental capacity to make decisions; and
seeking the Court’s approval for decisions outside the scope of the Deputyship Order.

Decision-Making Process in the Court of Protection

Court of Protection Mental Capacity Assessment

One of the primary functions of the Court of Protection is to determine whether an individual has the mental capacity to make specific decisions. This assessment is crucial in establishing whether a person can make decisions independently or requires the assistance of a Deputy. The Court follows the Mental Capacity Act 2005’s guidelines to assess individuals’ capacity and make decisions in their best interests.

As part of any application to the Court of Protection, you must have and submit a medical practitioner’s or social care professional’s report to support your Deputyship application.

Court of Protection Statutory Wills

In cases where an individual lacks the mental capacity to make a Will or to amend their existing Will, the Court of Protection can make a Will on the protected person’s behalf, known as making a Statutory Will.

You can apply to the Court of Protection with a draft Will and ask for the Court’s authorisation for a third party to sign the protected person’s Will on their behalf. Where possible, the Court of Protection will consider evidence of the protected person’s past and present wishes and feelings and whether making the Will would be appropriate and in the protected person’s best interest. The Court considers each application on a case-by-case basis. The application is not straightforward, and you will need to serve notice of the application to all parties that may be affected.

Making gifts

A Deputy cannot make gifts on the protected person’s behalf without specific permission from the Court of Protection.

It is possible to ask the Court of Protection for permission to allow the Deputy to make gifts on behalf of the protected person if the Deputy can show that the gifting is in the protected person’s best interest and that it is something they would have considered doing if they did not lack the necessary capacity.

Deprivation of Liberty under the Mental Capacity Act 2005

An individual’s liberty can be taken away in certain circumstances, usually as a last resort. The Court of Protection has the authority to decide on the deprivation of liberty. For example, the Court may limit an individual’s freedom by preventing them from moving freely without supervision, either in their own home or a care home. You must apply to the Court of Protection if it is necessary to deprive an individual of their liberty for their safety or the safety of others. The Court will carefully assess the circumstances and determine whether the deprivation of liberty is in the individual’s best interests.

The Importance of a Lasting Power of Attorney

Planning for the Future with a Lasting Power of Attorney

To avoid the Court of Protection intervening in the event of a loss of mental capacity, individuals can set up a Lasting Power of Attorney (LPA). An LPA allows individuals to choose someone that they trust to make decisions on their behalf if they cannot in the future. By appointing an attorney through an LPA, individuals can protect their best interests and ultimately control who decides matters for them. While you retain mental capacity, you can discuss and relay your wishes to your attorneys.

The Benefits and Limitations of Lasting Powers of Attorney

Having an LPA provides peace of mind and security in knowing that you chose the person to make decisions on your behalf. Creating and registering an LPA is less costly and time-consuming than involving the Court of Protection, and it streamlines the decision-making process. However, it is essential to note that LPAs have their limitations, such as the need for mental capacity at the time of creation and the potential for abuse if the appointed attorney does not act in the individual’s best interests.

A well-drafted LPA can include bespoke safeguarding provisions which allow you to limit or extend the powers you confer on your attorneys.

The Court of Protection and Compensation Claims

Involvement of the Court of Protection in Personal Injury Claims

In cases where an accident results in a person losing mental capacity and they wish to pursue a personal injury claim, the Court of Protection becomes involved. The Court may appoint a Deputy to act on behalf of the injured person during the legal proceedings or after awarding the compensation. The Deputy becomes the point of contact for the personal injury solicitor and ensures that the compensation is managed appropriately in the protected person’s best interests.

Role of Deputies in Compensation Claims

Deputies play a crucial role in compensation claims by ensuring they meet the protected person’s financial and welfare needs. They may assist in securing compensation on behalf of the protected person and make decisions regarding the funds’ use. In cases where a protected person lacks the mental capacity to manage their finances, the Deputy may set up a personal injury trust to protect the compensation from being means-tested and accessed incorrectly.

Setting Up a Personal Injury Trust

When a personal injury compensation award needs to be protected, a Deputy can establish a personal injury trust. A personal injury trust ensures the compensation is ring-fenced and not considered for means-tested benefits or care assessments. It provides a safeguard for the protected person’s financial future. It allows them to benefit from the compensation without affecting their eligibility for support.

Applying for Court of Protection Assistance

How to Apply to the Court of Protection

If an individual requires assistance from the Court of Protection, the proposed Deputies must follow various steps to make an application. They can apply online through the official government website or by contacting the Court of Protection directly. It is essential to provide all relevant information and supporting documentation to support the application and ensure that the Court comprehensively understands the situation.

If you are missing any relevant information or documents, the Court of Protection may make an interim order to allow you permission to request further information from the appropriate third parties.

You should seek advice from solicitors or legal professionals to avoid unnecessary delays with your application.

Short-term and Long-term Help

The Court of Protection can offer short-term and long-term assistance depending on the individual’s circumstances. Short-term help may involve appointing a Deputy for a specific decision or a limited period to make decisions on behalf of the protected person, such as managing their finances while they cannot. Long-term help may involve appointing a Deputy for ongoing decision-making, covering financial and welfare matters, when the protected person lacks the mental capacity to make these decisions themselves.

Frequently Asked Questions

Who can Become a Deputy?

Anyone over the age of 18 can become a Deputy. However, the Court of Protection prefers to appoint family members or close friends who have a personal connection to the protected person. But, there may be reasons why the Court of Protection cannot appoint such relatives or friends. When applying to become a Deputy, you must undertake any duties and responsibilities at the standard the Court expects.

If no suitable family member is available, it is possible for a professional, such as a solicitor or accountant, to be appointed as a Deputy. The critical consideration is that the appointed Deputy acts in the protected person’s best interests and has the necessary skills and knowledge to fulfil the role.

Can Multiple Deputies be Appointed?

Yes, the Court of Protection allows for the appointment of multiple Deputies. They can act jointly, meaning all Deputies must agree on decisions, or jointly and severally, meaning Deputies can make decisions individually or together. However, the Court generally discourages appointing more than three individuals as Deputies to avoid complexities, increased costs, and potential delays. Having multiple deputies allows for the burden to be shared between the Deputies so that they are more manageable.

What are the Limitations of a Deputy’s Powers?

Deputies have certain limitations on their powers. For example, they cannot make decisions regarding life-sustaining treatment, create or amend a will, or make significant gifts using the protected person’s money. Deputies cannot hold money or property in their own name on behalf of the protected person. Any decisions made by the Deputy must be in the protected person’s best interests and aligned with the Mental Capacity Act 2005 principles. You may need to return to the Court of Protection to seek further authority to manage the protected person’s affairs.

Expert Advice and Support

Seeking Legal Guidance and Support

Navigating the Court of Protection process and understanding the legal implications can be complex. It is essential to seek legal guidance and support from experienced professionals specialising in Court of Protection matters. Solicitors and legal advisors can provide personalised advice, assist with applications, and ensure compliance with the relevant laws and regulations. They can also help address any concerns or disputes related to decision-making. Our private client team can support and guide you through the process.

Conclusion

Without a valid Lasting Power of Attorney in place, when accidents result in individuals losing their mental capacity, the Court of Protection plays a vital role in protecting the person’s interests and making decisions on their behalf. With the appointment of Deputies and the involvement of the Court, vulnerable individuals can receive the necessary support and guidance to manage their finances, welfare, and legal matters. Planning for the future with tools like Lasting Power of Attorney can also give individuals a sense of control and peace of mind. Seeking expert advice and support is crucial to effectively navigating the Court of Protection process and ensuring the best outcomes for those in need.

Speak to James McMullan today if you have any questions or want to discuss making Lasting Powers of Attorney or a Deputyship application to the Court of Protection.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Directors must understand the implications of AI

Posted on November 9, 2023 - 11:44 am by Penny Dewar

AI Regulation - the UK's approach - picture to go with article. Picture of a man at a computer with overlaid images.

As businesses increasingly turn to AI-driven solutions, the dynamics of decision-making, risk management and strategic planning have undergone a profound evolution. Directors must navigate the demanding interplay between technology and corporate governance to steer their companies towards a successful and ethically sound future in the AI-influenced corporate world.

Understanding AI impact

Strategic decision-making

Directors need to grasp how artificial intelligence affects the company’s strategic decisions. This includes understanding how it can optimise processes, enhance product development and improve customer experiences. Without this knowledge, they might miss out on innovative opportunities it can provide.

Ethical considerations

AI applications often involve complex ethical considerations, including issues related to bias in algorithms, data privacy and the impact of AI on society. Awareness of these ethical concerns is essential to ensure the company’s AI initiatives align with ethical standards and public expectations.

Risk assessment

AI implementation introduces its own set of risks, such as cybersecurity threats and legal challenges. Directors must be well-versed in these risks to make informed decisions about its adoption, develop risk mitigation strategies, and ensure the company operates within legal boundaries.

Compliance and regulation

The legal landscape surrounding AI is continually evolving. Directors need to understand the regulatory requirements related to AI applications in the jurisdictions where the company operates. Compliance with these regulations is a legal obligation and a crucial aspect of maintaining the company’s reputation and customer trust.

Financial implications

AI implementation involves significant financial investments. Directors must understand the financial implications, including the costs of implementing AI solutions, potential return on investment, and long-term financial sustainability. This understanding is essential for budgeting, financial planning, and resource allocation.

Stakeholder expectations

Shareholders, customers, employees, and other stakeholders may have varying expectations and concerns regarding AI. Directors must be aware of these expectations to address concerns transparently and align initiatives with stakeholder interests.

Overseeing Implementation and Use

In terms of oversight and use, the scrutiny applied to AI should mirror the rigorous approach directors take towards other critical aspects of the business, such as management, compliance, risk, and disclosure:

Transparency and accountability

Directors must ensure transparency in AI-related decision-making processes. Transparency fosters accountability, which is essential for building trust among stakeholders.

Regular assessment

AI initiatives should be regularly assessed and evaluated, just like other aspects of the business. Directors should demand comprehensive reports on performance, risks and compliance to make data-driven decisions and adjust strategies as needed.

Continuous learning

The field of artificial intelligence is rapidly evolving. Directors must continuously learn to stay abreast of the latest advancements, emerging trends and best practices. This knowledge equips them to make informed decisions and guide the company toward sustainable adoption.

By ensuring that their understanding of AI’s impact is comprehensive and their oversight approach is thorough, directors can effectively navigate the challenges and harness the opportunities and plethora of ever-increasing benefits presented by artificial intelligence.

Contact corporate partner Victoria Holland today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Overzealous employee monitoring may overstep data protection boundaries

Posted on November 8, 2023 - 6:32 pm by Penny Dewar

Employee monitoring lady's hands at a keyboard

Can employers monitor employees?

You can monitor employees if you do it in a way which is consistent with data protection law.

Data protection law does not prevent employers from monitoring employees. Instead, it requires employers to do so in compliance with existing data protection laws. Equally important is the Human Rights Act 1998, which concerns a person’s right to respect for private and family life. With the rise of homeworking and increased employer monitoring, this right is becoming increasingly important and relevant. An employee’s expectation of privacy is likely to be significantly higher when working at home. Yet, the risk of recording private information increases the more employees work from home. Employers must balance employee’s rights and freedoms against their business interests.

Impact of remote/hybrid working

Electronic monitoring of employees has risen in tandem with the rise in home working triggered by the Covid-19 pandemic. While the number working from home has dropped from its peak of 49% during the 2020 lockdowns, most recent figures from the Office of National Statistics show that around 40% of working adults still work from home at least some of the time.

Before the pandemic, the figure was around 12.5%, and the dramatic shift has driven businesses and organisations into uncharted territory to manage their workforce. Many have addressed the challenge by increasing electronic monitoring to tackle any loosening of control.

New research from the Information Commissioner’s Office (ICO), which oversees and regulates data protection and freedom of information in the UK, found that 19% of those surveyed believe an employer has monitored them.

Asked how they felt about being monitored, 70% of those surveyed by the ICO said it was intrusive. Only 19% were comfortable taking a new job where an employer would monitor their activity.

This discomfort echoes findings by the Trades Union Congress (TUC) in 2022, which found significant and growing support amongst workers for stronger regulation of AI and tech-driven workplace surveillance, with more than 70% saying they believed technology-informed decision-making could increase unfair treatment. The TUC research found some sectors reporting very high levels of surveillance, for instance, more than 70% across the financial industry and the wholesale and retail sectors.

Employment solicitor Patrick Simpson explains:

“Developments in software have made a range of options available to employers, making it all too easy to implement a form of monitoring, whether to check if people start work on time or to monitor activity – such as through the number of keystrokes made. However, employers should not take that ease of monitoring for granted. Any monitoring has to comply with data protection law.

There’s also the potential breakdown in trust and reputational damage that may come through implementing what employees may consider to be a surveillance culture.”

Patrick added:

“Any surveillance must measure up against at least one of these criteria. However, it may be tricky in some situations because of the imbalance in an employer/employee relationship. In some circumstances, employees may feel they are risking their jobs if they dispute a planned form of monitoring.

The best approach is to ensure that any action is legal and that employees know what is happening and have a sense of trust. It’s too easy for surveillance to feel like an invasion of privacy, whether or not it passes the legal test. Policies must also be regularly reviewed and updated to align with technological advancement.”

Six situations where employee monitoring is allowed

Consent
Contract
Legal obligation
Vital interests
Public tasks
Legitimate interests

To support organisations in ensuring that any employee monitoring is lawful, transparent and fair, the ICO has issued guidance for employers, which highlights some of the key considerations:

Making employees aware of the nature, extent and reasons for monitoring.
Having a clearly defined purpose and using the least intrusive means to achieve it.
Having a lawful basis for processing employees’ data – such as consent or legal obligation.
Telling employees about any monitoring in a way that is easy to understand.
Only keeping the information which is relevant to its purpose.
Carrying out a Data Protection Impact Assessment (DPIA) for any monitoring likely to result in a high risk to the rights of employees.
Making the personal information collected through monitoring available to employees if they make a Subject Access Request (SAR).

The privacy watchdog has also warned employers, saying they will take action against employers if they threaten people’s privacy.

What is a Data Protection Impact Assessment (DPIA)?

DPIAs are a formal procedure through which an organisation can assess the impact of data processing activities and protect personal data. Under the Data Protection Act 2018, you must carry out a DPIA when processing personal data is “likely to result in a high risk to the rights and freedoms of natural persons.”

Even if not legally required, completing a DPIA helps you identify and minimise the risks of any monitoring activity you plan. The DPIA process includes a step to discuss your plans to introduce monitoring with employees. This step will help to shape your plans and build trust with your employees.

Speak to employment solicitor Patrick Simpson today for practical guidance on this complicated area of law. He can help ensure your business complies with data protection obligations and minimise the risk of claims from disgruntled employees.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Legal considerations for launching a charity business

Posted on October 31, 2023 - 1:32 pm by Penny Dewar

Understanding charities

Charities are organisations focused on benefiting others rather than personal gain. The UK has over 160,000 registered charities, all defined by the Charity Commission as altruistic entities. Charities often arise to address unmet needs, and often, they emerge from personal experiences or community projects. While major charities get attention, smaller ones can also significantly impact communities.

Charity vs. business

Charities solely serve their charitable purposes, unlike businesses that mix charitable and non-charitable activities. To generate profits through a charity business, consider social enterprises or Community Interest Companies.

Fundraising

Starting a charity requires dedication and sustainable funding. While government grants are common, competition is tough. Relying solely on grants may not be viable. Diversifying funding sources like using the National Lottery grants and creating a solid charity business plan are crucial if you want your charity to have a lasting impact.

A well-crafted business plan guides a charity’s operations and understands beneficiaries’ needs. Thorough research into your business plan will help you secure funding, as most applications require a comprehensive plan.

Rules and regulations

Once your charity generates more than £5,000 in revenue, it becomes mandatory to register with the Charity Commission. Registration is a rigorous process, and registered charities must comply with a set of standards outlined by the commission. Before registering, your charity must establish a robust charity structure, which typically involves adopting a governing document and appointing trustees.

Four common charity structures

Unincorporated associations: Suitable for small charities that do not anticipate exceeding a certain revenue threshold. However, trustees of unincorporated associations bear personal liability for the charity’s activities, and this structure lacks a separate legal status.

Trusts: Appropriate for charities that already possess funds they wish to contribute to a charitable cause. Trusts also lack a separate legal status.

Charitable incorporated organisations: Charitable incorporated organisations are a relatively new legal structure for charities that combine the benefits of limited liability companies with the simplicity of registering with the Charity Commission.

Charitable companies: Operate similarly to private companies limited by guarantee, providing the flexibility to employ staff, own property, and engage in various business activities. This structure protects personal finances and assets, as the charity possesses its own legal identity. Additionally, charitable companies must register with Companies House.

Choosing the right charity structure

Selecting the appropriate charity structure for your organisation is a critical decision that impacts various aspects of its operations. Factors to consider include who will run the charity, how it will be governed, and the range of activities it can undertake. Each structure has its advantages and disadvantages, and it is essential to assess your specific needs and objectives before making a choice.

Unincorporated associations are suitable for small charities with limited resources. At the same time, trusts are ideal for those with existing funds to contribute. Charitable incorporated organisations offer the benefits of limited liability companies without the administrative complexity. In contrast, charitable companies provide flexibility in employing staff, owning property, and conducting business activities. You should carefully evaluate your requirements and, if necessary, consult legal professionals to determine the most suitable structure for your charity.

Converting a limited company to a charity

If you currently operate a registered limited company and wish to transition it into a registered charity limited by guarantee, it is possible to change your Articles of Association rather than initiate the process of starting a new charity. This option allows you to leverage the existing structure and resources of your company while aligning its activities with charitable purposes.

By amending your Articles of Association, you can reflect the new charitable direction of your organisation and ensure compliance with charity regulations. Working with legal professionals or utilising online resources can guide you through converting your limited company into a registered charity, enabling a seamless transition while maintaining continuity.

Conclusion

Establishing a charity represents an opportunity to make a lasting impact on society and contribute to causes that align with your values. While the process can be complex, understanding the legal considerations and following the necessary steps outlined in this guide will help you navigate the path to successfully launching your own charity in the UK. By conducting thorough research, crafting a comprehensive charity business plan, and selecting the appropriate structure, you can set the foundation for a sustainable and impactful charitable organisation. Remember, seeking advice and professional support throughout the process can provide valuable insights and ensure compliance with legal requirements, allowing you to focus on making a meaningful difference in the lives of others.

Contact corporate partner Victoria Holland today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

UK approach to AI regulation

Posted on September 28, 2023 - 9:12 am by Penny Dewar

In March 2023, the government produced its white paper “A pro-innovation approach to AI regulation“. The white paper follows the government’s AI regulation paper published in 2022.

Through its white paper, the government hopes to promote responsible innovation and uphold public confidence in this ground-breaking technology. It covers issues we face as AI advances, provides recommendations to overcome specific problems and sets out a regulatory framework.

The proposed regulatory framework

Unlike the EU, the UK government does not plan to adopt new legislation to regulate AI. Nor will it create a new regulator. It will rely on existing regulators to apply essential safety, transparency, and accountability principles to emerging AI. It says, “By rushing to legislate too early, we would risk placing undue burdens on businesses.” Plus, it would be difficult for legislation to keep up with this advancing technology.

The government believes its regulatory approach is flexible and adaptable and will promote innovation that can move with the times.

The paper also acknowledges the importance of international cooperation in regulating AI. It highlights the need for global standards and collaboration between nations.

The good and the bad

AI’s potential for good is vast:

Bias-Busting Potential: Quantum computing coupled with AI chatbots, as suggested by physicist Kaku Michio, could help eliminate bias and discrimination from AI outcomes, ensuring fairness for all.
Medical Marvels: AI’s application in healthcare can lead to faster and more accurate diagnoses, personalised treatment plans, and drug discoveries, revolutionising medical practices and saving lives.
Efficiency Boost: AI can automate tasks, increasing productivity and freeing humans from mundane work, ultimately driving economic growth.
Advanced Accountability: The combination of AI and quantum computing might pave the way for more transparent and accountable AI systems, making tracking and rectifying potential issues easier.

However, as with much innovation, AI also brings with it potential dangers:

Potential Biased Outcomes: AI’s reliance on biased training data can perpetuate unfair outcomes, deepening societal biases and causing discriminatory effects on individuals and groups.
Opaque Complexity: Understanding and evaluating AI systems is complex, making assigning responsibility and accountability for any adverse consequences challenging.
Job Disruption: The automation potential of AI poses a significant threat to jobs across industries, leading to potential unemployment and economic instability.
Data Dangers: Gathering extensive data for AI applications raises privacy and data protection concerns, as AI could uncover personal information without consent.
Safety and Security Risks:
AI’s susceptibility to cyberattacks and its use in critical sectors such as healthcare and transportation raises safety and security apprehensions.

The UK’s five AI regulatory framework principles

The UK government has adopted five fundamental principles to underpin the framework to guide and inform the responsible use and development of AI:

Safety, security and robustness
Appropriate transparency and explanation
Fairness
Accountability and governance
Contestability and redress

The proposed regulatory framework and the legal sector

AI regulation is set to reshape the legal arena dramatically. It’s about fairness, ethics, and accountability.

Think AI-driven legal decisions that are not just swift but are inherently just —a massive change to an industry built on precedent. Envision AI pouring over case law, laying out its reasoning transparently, open for ethical scrutiny.

But it doesn’t stop there. Privacy takes the spotlight. Imagine AI that can predict case outcomes by diving into historical data without compromising privacy. AI that can draft airtight contracts, optimising terms with historical data while fiercely guarding client secrets.

AI in law isn’t just about efficiency; it’s about upholding trust in a system as old as civilisation.

The bottom line is that AI’s role in the law is imminent, where decisions are just, privacy is paramount, and trust is non-negotiable. Get ready for an innovative and unshakably principled legal landscape powered by AI.

Conclusion

Although the UK government has taken a light touch approach to regulation, the UK’s policy may go some way to allaying concerns raised by high-profile individuals, such as Geoffrey Hinton ‘the godfather of AI’ and Elon Musk, that it is not mindlessly going, in the words of Star Trek, “Where no man has gone before”, and that its approach is both considered and flexible to keep up with this fast-paced tech.

The proposed AI regulatory framework provides necessary protection to steady the pace of the rapidly evolving AI technology and all its implications, with significant benefits for individuals and society, provided that it is carefully implemented and monitored to ensure that it achieves its intended goals.

Contact corporate partner Victoria Holland today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Death of a shareholder

Posted on September 5, 2023 - 8:40 am by Penny Dewar

When a shareholder dies, their shares are dealt with by the executors of their estate (if there is a will) or by the administrators under the Intestacy Rules (if there is no valid will). Both the executors and administrators are known as ‘personal representatives’ (PRs).

Infochart The Intestacy Rules 2023 Update

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What happens next with the shares depends on the terms of any shareholders’ agreement relating to the company in which the shares are held, the company’s articles of association and the ages of the beneficiaries of the shares.

Shareholders’ agreement

If a shareholders’ agreement exists, it is the first reference point in determining the next steps, as it may include rules about what happens to those shares in the event of a shareholder’s death.

Shareholders may have included provisions to prevent family members from becoming shareholders in a business they know nothing about. Or to stop the sale of a deceased shareholder’s shares to third parties.

The shareholders’ agreement may include rights (so-called ‘pre-emption rights’) that entitle the remaining shareholders (or some of them) to purchase the deceased shareholder’s shares before anyone else. Or there may be an option agreement triggered on death, which allows the beneficiaries to buy out the remaining shareholders.

Articles of association

PRs must next review the company’s articles of association for additional or supplemental provisions.

Under the default rules of the Model Articles, PRs can enter themselves into the company’s statutory registers as the holders of the deceased’s shares or, as appropriate, transfer the shares to particular persons.

Many companies have bespoke articles of association, which often include restrictions on the transfer of shares and may allow the directors to refuse to register new members. Any such share transfer restrictions will generally apply to transfers of shares on death.

If the shareholders’ agreement conflicts with the articles of association regarding any matters, the shareholders’ agreement will prevail. If the shareholders’ agreement is silent on any issues, the articles of association would determine the position.

Ages of beneficiaries

You must consider the ages of the beneficiaries to whom the shares pass.

If any beneficiaries are under 18 years old, then, depending on the will (if there is one), there are two options: either the PRs must form a trust to look after those children’s shares, or the children’s guardians receive their shares in the expectation that they will use them for the benefit of the children.

If the PRs form a trust, the trustees (who may be PRs or others) will administer the trust for the beneficiaries. The trust will own the shares, but the trustees will vote on company issues.

How we can help

Exit is one of the critical issues shareholders consider when setting up or becoming involved in any business. These plans must include providing for what happens if a shareholder dies.

If you need to put a shareholders’ agreement or bespoke articles of association in place, RIAA Barker Gillette’s experienced corporate and commercial team can prepare them.

We can also advise you on the terms of an existing shareholders’ agreement or articles of association and help ensure you incorporate appropriate provisions to death and other matters you may need to consider.

Call corporate solicitor Evangelos Kyveris today or speak to the head of our private client department, James McMullan.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

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Estate planning for blended families

Posted on August 31, 2023 - 5:12 pm by Penny Dewar

Blended families picture of a family of various ages walking along the beach.

Blended families have become increasingly common in today’s society. As relationships evolve and individuals remarry or enter into new partnerships, estate planning becomes crucial. It ensures the fair and smooth transfer of assets to loved ones. In the context of blended families, where there may be children from previous relationships, navigating wills and inheritance requires careful thought and legal expertise. This article aims to provide valuable insights and guidance for UK residents.

Understanding the unique challenges

Blended families face unique estate planning challenges due to the complex dynamics involved. Considerations such as protecting the interests of biological children from previous relationships, providing for a new spouse or partner, and addressing potential conflicts among family members require thoughtful planning.

Updating your will

One of the most critical steps in estate planning for blended families is updating your will. A well-drafted will ensures that you clearly outline your wishes regarding asset distribution. Failing to update your will after entering a new relationship may lead to unintended consequences, with assets potentially passing to the wrong beneficiaries or even causing legal disputes, which can be hugely expensive and damaging to family relationships. When updating your will, it is essential to consider the following points:

Spousal/civil partner inheritance rights: In the UK, a spouse or civil partner has certain automatic inheritance rights, regardless of what a will states. Understanding these rights and ensuring that your wishes align with them is essential. Consulting with a knowledgeable solicitor will help you understand and navigate these legal requirements effectively.
Provision for biological children: Suppose you have children from a previous relationship. In that case, you may wish to ensure that you provide for them adequately in your estate plan. You can achieve this through specific provisions in your will, such as leaving assets or establishing trusts to benefit your children.
Providing for a new spouse or partner: Most people want to provide for their new spouse or partner while ensuring their children receive their fair share. Various strategies, such as life interest or discretionary trusts, can be implemented to balance these competing interests. Seeking legal advice will help you determine the most suitable approach based on your circumstances.
Guardianship of minor children: If you have minor children, it is vital to address guardianship arrangements in your will. Designating who will assume guardianship responsibilities ensures that your children will be cared for according to your wishes.

Communication and managing expectations

Open and honest communication is essential when navigating estate planning matters within blended families. Discussing your wishes and intentions with all relevant parties can help manage expectations and minimise potential conflicts. Consider involving family members, especially those directly affected by your estate plan, in the discussion process. While conversations about inheritance can sometimes be uncomfortable, proactively addressing these matters can help avoid misunderstandings and resentment later on.

Seek professional guidance

Given the complexities involved in estate planning for blended families, seeking professional guidance from a reputable law firm specialising in estate planning and family law is strongly recommended. An experienced solicitor can provide tailored advice, help you understand the legal implications, and ensure your estate plan is comprehensive and legally sound.

Regular review of your estate plan

Lastly, periodically reviewing and updating your will and estate plan is crucial to reflect any changes in your family dynamics, financial situation, or legislation. Life events such as births, deaths, divorces, or significant financial changes may necessitate adjustments to your Will or other estate planning documents. By conducting regular reviews, you can ensure that your estate plan remains up-to-date and aligned with your current wishes.

Navigating your will

Estate planning for blended families requires careful consideration and professional expertise. Updating your will, effectively communicating with your loved ones, and seeking the guidance of an experienced solicitor will help you navigate the complexities and ensure the distribution of your estate accords with your wishes. You can achieve peace of mind by undertaking these essential steps and know that your estate will be distributed according to your intentions, ultimately providing for your new family and any children from previous relationships.

Contact James McMullan today for estate planning advice for blended families.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Unfair contract terms

Posted on August 18, 2023 - 6:40 pm by Penny Dewar

In this article, corporate partner Victoria Holland highlights examples of the Unfair Contract Terms Act (UCTA)’s reasonableness test by looking at two examples of case law.

St Albans City and District Council v International Computers Ltd

Case background

The St Albans council bought a computer system from International Computers Limited (ICL) to collect a new local tax. St Albans overestimated the number of taxpayers because of a fault in the software and set the rate too low. It sued ICL for over £1 million in damages for breach of contract. ICL relied on a clause in its standard terms of business limiting its liability to £100,000.

Decision time

Both the High Court and the Court of Appeal held that the limit of £100,000 was unreasonable under UCTA. The main reasons for finding the limit unreasonable were:

ICL was a large company with substantial assets and well insured. Therefore, it was better positioned to bear losses than the St Albans local authority. The local authority would have to meet losses from increased local taxes, reduced services or both.
It was reasonable for the person making the profit to carry the risk.
ICL was in a strong bargaining position. St Albans had no realistic alternative to accepting ICL’s terms. St Albans had objected to the limitation clause in negotiations. However, ICL said St Albans had to refer any changes back to its legal department. The resulting delay would have made it impossible to launch the new tax on time.
St Albans had not been offered any inducement, such as a reduction in price, to accept the limitation.
St Albans had no opportunity of getting better terms elsewhere because other sellers were offering similar terms (with the same cap on liability).
The limitation of £100,000 bore no relation to ICL’s insurance cover of £50 million, and ICL had not attempted to justify the difference.

As an aside, the Court of Appeal reduced the award of damages on unrelated grounds.

Phoenix Interior Design Ltd v Henley Homes plc and another

Case background

Interior design services were provided to the defendants by Phoenix Interior Design for the refurbishment and fitting out of the 5-star Dunalastair Hotel in the Scottish Highlands. Phoenix sought payment of outstanding invoiced sums, representing 50% of the total contract value. The defendants argued that the contract had not been completed based on various allegations that the goods and services supplied had been defective and counterclaimed for damages for breaches of warranty.

The case was tried over two weeks in the Queen’s Bench Division. The judgment considered the law on the incorporation of standard terms and conditions, UCTA’s reasonableness of exclusion clauses, acceptance, and contractual completion. The defence for the counterclaim related to the following clauses:

“8 Warranties and Liability

8.1 Subject to the conditions set out below, the Seller warrants that the Goods will correspond with their specification at the time of delivery (subject to the Seller’s right under clause 3.3 to alter and amend any specification) and will be free from defects in material and workmanship for a period of 3 months from delivery.

8.2 The above warranty is given by the Seller subject to the following conditions: ……

8.2.3 the Seller shall be under no liability under the above warranty (or any other warranty, condition or guarantee) if the total price of the Goods has not been paid by the due date for payment. “

Application of the reasonableness test

UCTA’s reasonableness test applies here where the terms seek to exclude liability. The court held that the exclusion was ineffective because it was an unusual clause hidden in the terms and conditions and hadn’t been properly highlighted to the customer. It was also unclear and exorbitant, which would bar all rights of redress against the supplier for even a slight delay or deduction. The following points were raised and should be taken into account when drafting and dealing with limitation clauses in standard terms:

Visibility and Signposting: Ensure that harsh and unusual exclusions and limitations are clearly visible and not hidden in small print. This helps to avoid disputes and challenges regarding their incorporation and enforceability.

Incorporation of Standard Terms: Make it easy for the counterparty to find the standard terms. Clearly state how the terms are incorporated into the contract. Even if the terms are not provided “overleaf” as stated in pre-contract proposal documents, they can still be considered incorporated if they are supplied separately to the customer, both in hard copy and by email.

Reasonableness Test: The same factors that affect the incorporation of standard terms are relevant to the reasonableness test under the Unfair Contract Terms Act (UCTA). If the exclusion or limitation clauses are clearly visible, the supplier will likely have a stronger case on reasonableness.

These practical points should help ensure that limitation clauses are effectively drafted and incorporated into contracts, reducing the risk of disputes and challenges.

Key takeaways

Applying the reasonableness test can be complex and highly fact-specific. When negotiating your commercial contracts, it is advisable to consult legal professionals well-versed in contract law and who can help navigate UCTA and other relevant statutory and case law.

Speak to corporate partner Victoria Holland for more detailed and accurate guidance on applying the reasonableness test under the Unfair Contract Terms Act. Call him today.

Note: This article is not legal advice; it provides information of general interest about current legal issues

Can a UK employee work abroad remotely?

Posted on July 19, 2023 - 6:04 pm by Penny Dewar

Photo by Euan Cameron on Unsplash

Employer approval and communication

Before employees embark on working abroad remotely, they must obtain express approval from their employer. Employers should understand an employee’s intentions and clarify any concerns or expectations to ensure that the arrangement aligns with company policies, procedures and management.

Open and transparent communication is critical to maintaining a positive working relationship.

Whilst some cases may turn on their facts, any approach to remote working should be consistent and employees treated fairly.

Immigration and work permits

When working abroad remotely, it is vital to comply with that country’s immigration and work permit requirements. Accordingly, travelling to another country as a tourist and working remotely without the necessary permits may be illegal and have serious consequences.

Employers should research and take advice on the immigration regulations of the country the employee wishes to work from. Determine if the employee is eligible to work abroad remotely.

Tax implications

Working abroad, whether remote or not, may have tax implications in the UK and the country the employee plans to work from.

Tax residency rules and double taxation treaties come into play. An employer must understand its obligations regarding collecting and reporting tax if employees work abroad remotely.

These countries will have their own PAYE equivalent systems, and the employer will likely be responsible for correctly administering the employee’s tax payments and complying with any reporting obligations.

Failure to comply with tax regulations can result in penalties and legal issues. It is advisable to seek professional advice to understand the tax obligations in both jurisdictions.

Employment rights and benefits

While working abroad remotely, UK employees still retain their rights and benefits under UK employment law. For instance, such rights include rights relating to working hours, rest breaks, annual leave, and protection against discrimination.

It is crucial to ensure that remote working arrangements do not compromise these rights.

Employment contract and terms

Reviewing the employment contract and any relevant policies or agreements already in place is essential. Some employment contracts may contain specific clauses addressing remote working or working abroad. It is vital to understand the terms and conditions surrounding remote work, whether any geographical restrictions apply, and discuss these with the employee making the request.

Some employers reading this may take a proactive approach and review their employment contracts and policies in anticipation of requests from their employees.

Data security and privacy

Remote work requires careful consideration of data security and privacy. Ensure you have the necessary cybersecurity measures to protect sensitive company information and personal data. Employers should familiarise themselves with the data protection laws of the country the employee plans to work from and the UK to ensure compliance.

Cultural and legal differences

Each country has its cultural norms, legal system, and employment practices. Therefore, employers must invest time in familiarising themselves with the local customs, work culture and legal framework of the country where the employee will work.

Suppose an employee works abroad remotely for an extended period. In that case, they may acquire local employment rights even if the employer is UK-based. This situation might result in the employee having greater employment rights than colleagues working for the same employer. Such an imbalance could cause administrative difficulties and lead to employee inequality.

Conclusion

Employers must seek local legal advice on employees’ statutory rights, especially when terminating the employment relationship. In contrast, while working abroad remotely may seem enticing to employees, navigating the legal landscape and considering the necessary precautions are essential.

Understanding an employee’s immigration requirements, tax implications, and other legal considerations will help you make informed decisions and avoid potential legal pitfalls.

Open communication with the employee and professional advice from legal and tax experts is invaluable in ensuring a smooth and compliant transition to working, or not working, abroad.

Call Karen Cole today if you need advice on navigating overseas remote working or would like to review and update your employment contracts and associated policies.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Greenwashing attracts the wrong attention

Posted on July 18, 2023 - 7:28 am by Penny Dewar

Greenwashing image of painting - green acrylic

Photo by Nick Collins on Unsplash

The Advertising Standards Authority (ASA) has found Shell guilty of ‘greenwashing’ with an advertising campaign themed ‘ready for cleaner’ that breached advertising guidelines.

The ASA ruled the petrochemical giant’s campaign was misleading as it left out information on Shell’s more polluting work with fossil fuels. The ASA banned the adverts from appearing in the future.

It’s the latest such breach confirmed by the ASA. This follows Tesco’s ban for a plant-based burger ad, a Persil advert, and two HSBC adverts. The ASA found all to be misleading in their claims of environmental benefits.

The ASA is the UK’s independent advertising regulator responsible for ensuring that ads across UK media stick to the advertising codes.

“Action like this to tackle inflated environmental sustainability claims is only likely to increase, as we see rising consumer and investor demands for products and services that fulfil sustainable objectives.

For example, companies who may have selectively highlighted some actions over others, or perhaps slapped a green label and a recycling logo on a product need to be aware that their customers are going to look below the surface to be sure that brands aren’t offering them empty promises.”
Victoria Holland, Partner and Head of Corporate and Commercial at RIAA Barker Gillette

The press has spotlighted corporate greenwashing in the financial services sector too. But, the Financial Conduct Authority has anti-greenwashing rules on its schedule for later this year. It intends to include them in its Sustainability Disclosure Requirements.

“Certainly, larger organisations need to focus on Environmental, Social, and Governance (ESG) ratings, as this increasingly drives investment decisions in financial markets. It is inevitable that this type of attention will filter down to smaller enterprises regarding consumer demands.”
Victoria Holland

The term ‘greenwashing’ was first coined by an environmentalist in the USA during the 1980s. However, it has only recently entered everyday use. Some of the examples highlighted as corporate greenwashing tactics include:

Companies claiming that they have implemented positive ESG processes while the results or progress are yet to be seen
Cherry-picking product attributes or data and ignoring others which would be negative in environmental terms
Misuse of labelling schemes

The ASA and its sister organisation CAP (Committee of Advertising Practice) have published guidance. The guidance aims to help businesses comply with the ASA and CAP’s codes for broadcast and non-broadcast advertising, sales promotions and direct marketing communications. They also include postings on social media.

Contact Victoria Holland today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

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