Debts, deals and dumping

TIME MARCHES ON and tomorrow it will be 40 years to the day since the glamorous occasion when Princess Grace of Monaco, the former Grace Kelly, visited the Signet Library for a poetry recital televised by the BBC. The current edition of Signet magazine tells the story. This week preparations began for more glamour as bookings opened online for the WS Society’s Annual Dinner on 11 November. Invitations have been issued to guests from all walks of national life – media and journalism, artistic and cultural directors, business and academia – including, of course, the senior legal establishment. The WS Annual Dinner is one of the highlights of the Scottish calendar and this year will be no exception.

YESTERDAY’S CONFERENCE at the Signet Library drew the cream of Scotland’s litigation and dispute resolution sector to hear an outstanding group of speakers chaired by Sheila Webster WS. Next week it’s Lessons for Lawyers from Politics with former MSP Gavin Brown. 

“FEES FRAUD” was one headline this week that would have lawyers clicking nervously out of their time recording portals. The Times reveals that the now defunct insolvency firm P&A Partnership, best known for handling high profile administrations of several football clubs, including Crystal Palace and Plymouth Argyll, is the centre of an investigation into falsified billable hours for insolvency work. Whistleblowers have apparently passed documentary evidence to the authorities revealing allegedly fraudulent record keeping. The Times reports that HM Revenue & Customs have been told of “countless” other administrations in which insolvency firms have been “time dumping” to generate higher fees. Those old enough will recall the Hollywood film “The Firm”, based on John Grisham’s legal thriller of the same name, in which the Tom Cruise hero brought down the sinister Memphis law firm Bendini, Lambert & Locke for mail fraud and racketeering by overbilling based on falsified time recording records. Such racy-sounding crimes seemed far-fetched to anyone tempted to round up the figures or “time dump” to meet monthly KPIs. P&A is closer to home if rather extreme. A judgment in a civil case last year disclosed preliminary findings of overbilling by P&A employees. One partner of the firm is alleged to have charged time when he was literally “unavailable to do so” according to diary records, including 68 weeks in which there was hardly any documentary evidence of his working on the matter - examples included holidays and “out shooting for the day”. Allegedly up to 75% of the billed hours were not supported by any documentary evidence. Ironically P&A themselves went into administration last year and the business was acquired by another insolvency firm. No personal wrongdoing has yet to be established.

AMONG THE FALLOUT from the 2008 financial crash an apparent rise in the reporting of cases of hitherto unknown insolvency practitioner outfits alleged to have questionable pre-existing links to the former directors or purchasers of companies in administration. The whole ethos of “pre-packs”, which HM Government has left largely untouched following a review, has brought the insolvency scene into disrepute in some quarters, particularly due to cases of former directors buying back the profitable parts of insolvent businesses, leaving creditors and the tax payer to write off monies owed. The role of bonus-incentivised specialised units within the major banks, themselves no strangers to insolvency, has also contributed to an unsavoury picture. Not to mention Sir Phillip Green and the BHS debacle. The public then perceives corporate insolvency - like tax avoidance, zero hour contracts and the casualisation of workforces – as just another wheeze to enrich and subsidise an unscrupulous few who brush aside their wider social, moral and economic responsibilities. RBS’s global restructuring group has been the centre of allegations for years of profiteering from allegedly distressed or insolvent business. Many insolvency practitioners are reputable and operate to high professional standards, just as there are many reputable companies paying their fair share of tax. But the public perception of business and professional people is heavily influenced by what they read in the headlines. Since the crash, an impression has grown of a culture in which unethical and legally questionable behaviour not only goes unchecked but is frequently rewarded.

TALKING OF BUSINESS ETHICS Formula One is about to receive the attentions of EU competition commissioner Margrethe Vestager, fresh from her euros 13 billion tax bombshell on tech giant Apple. The EU is concerned that the sport is a cartel run for the benefit of the leading teams, Mercedes, McLaren, Red Bull and Ferrari. The investigation may interfere with the takeover of Formula One by US media group Liberty Global (owners of the Eurosport and Discovery TV channels) from private equity CVC Capital Partners that threatens the position of the octogenarian mastermind that controls the sport, Bernie Ecclestone. Other bidders are circling.

STILL ON BUSINESS ETHICS Apple seem determined to stress test customer loyalty. Last week it was the company’s outraged PR offensive against the EU’s challenge to its elaborate tax avoidance. This week, at the usual festival of stone-washed denim that is an Apple product launch in San Francisco, Apple announced... there’s no headphone jack in the new, water-resistant iPhone 7. Instead, a pair of AirPods will cost £159. The company is keen to dispel the notion that this is a cynical ploy to compensate for declining iPhone sales and says it’s all about the technology. Opinion is divided on whether Apple’s gamble will pay off or provoke a backlash. The company is banking on the cult-like loyalty it nurtures - its product launches have an evangelical quality – to make sure it’s the former.

LASTLY ON BUSINESS ETHICS only Mike Ashley of SportsDirect could shamelessly produce wads of bank notes when going through security at the company’s press open-day annual general meeting. Ashley becomes ever more Dickensian with every public appearance. 

REPORTS OF THE DEATH of the office have been greatly exaggerated. The opposite goes for the death of common sense. Law firms are talking more and more about flexible and “agile working”. However, new research indicates that everything in the garden is not quite so rosy. The study suggests that home working makes employees less productive, erodes their self-confidence and leads to social and professional isolation. Employees even end up resenting increased utility bills and other costs associated with working from home. Like the “gig economy”, it seems, flexible working is beginning to be perceived as anything but enlightened but rather an example of one-way traffic to suit the enabling employer or tech giant.  

THREE LAWYERS making a podcast about a 16 year old Baltimore murder conviction might not seem like a recipe for a podcast sensation, yet that is exactly what Undisclosed has become. Following on from the events disclosed in Serial, which attracted over 100 million downloads worldwide, US attorneys Susan Simpson, Colin Miller and Rabia Chaudry delve deeper into the 1999 murder of high school student Hae Min Lee and the incarceration of Adnan Syed. Making clear that this will not be the immaculately produced “beautiful narrative” of Serial, the three ask the listeners to forgive the sometimes imperfect recording, editing and production. Chaudry also explains her own conflict of interest in the case: her younger brother is one of Syed’s closest friends. Yet skills lacking as presenters and journalists are overshadowed by the interrogative nature of legal minds engaging with a case: within the first episode they have waded through evidence, documents interviews and court recordings at a breathtaking and gripping rate. The series is also able to focus more on the real-life characters that populate the story: episode 14, Tina, for instance, concentrates on Christina Gutierrez, Syed’s defence attorney. Gutierrez went from enormous success at the very peak of the legal sector in Baltimore to professional and personal disgrace, in a story that, if found in the pages of a Grisham novel, would be dismissed as unbelievable. All available free to download.

CONGRATULATIONS to the WS Society’s team – James Hamilton, Karen Baston and Ian Laing – winners of the Law Society of Scotland’s pub quiz this week. Hardly surprising that this most learned of institutions should see off the opposition.

— “Writer”

Writer's Week is not intended to represent the views of the WS Society or its members.