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Steven Bernstein discusses the keys to continued growth in a law firm in Modern Law Magazine

Posted on: March 17th, 2023 by AlexT

Co-Founder and Senior Director Steven Bernstein explores the development of Lawrence Stephens over the past 26 years, and discusses the importance of innovation, culture and entrepreneurship in growing a successful law firm.

Steven’s article was published in Modern Law Magazine, 17 March 2023, and can be found here.

In 1997, as businesses took their first tentative steps into the brave new world of the internet era, my two co-founders and I decided to make a similar leap into the unknown and establish our own firm. Despite the winds of change blowing through the commercial sector, the practice where we had been working retained an oppressive, outdated atmosphere and culture, which stifled our entrepreneurial spirit and our passion for fostering a positive working environment.

In other words, we wanted to create a people business.

Knowing full well the risks involved in starting a new business, we took strength from our collective ambition and zeal, and set up shop in a small 4-person office next to Oxford Street. Thanks to individual hard work and a committed group effort, the firm saw steady growth over the following years, as we focused on expanding our team through supporting the development of trainees and young lawyers, while also attracting lawyers from other practices impressed by our collegiate, familial workplace culture. This style of management proved a key factor in growing our business, and is an approach that still courses through the veins of the firm 26 years later.

Our main intention from the outset had been to create a firm which would allow partners and staff to have the independence and support needed to thrive, since it was the lack of such a culture at our previous employer that had stymied our own development as solicitors. By prioritising a supportive environment, we not only appealed to new talent, but were also able to nurture them throughout their careers, allowing both them and the business to flourish in tandem.

In this fashion, we were able to achieve steady growth over the next two decades, which was – counterintuitively perhaps – then sharply accelerated in the wake of the pandemic. The tragedy of the coronavirus outbreak was devastating for individuals and businesses alike, and we tried to play our part in assisting both staff and clients to cope during such a difficult period for the country. The only silver lining during lockdown was the move to working from home (WFH), which allowed hybrid and flexible working for staff, and meant we could expand our team without concern for physical office space requirements.

As a result, over the last two years the firm has doubled in size, both in terms of staff and turnover, in no small part thanks to our excellent retention rate of employees, who continue to value the care and attention shown by colleagues and management. They are also encouraged by the fact that my co-founders and I remain at the firm after more than 25 years, safe in the knowledge that the leadership have an unwavering commitment to the business and continue to play a key role in its growth and success.

Ever since our inception, we have recognised the importance of a safe, encouraging workplace culture for all of our colleagues to experience. We work to foster an atmosphere where staff enjoy their work, and also feel supported and heard by their peers and management alike. While taking a wholly serious and exacting approach to our work for clients, staff also feel that the firm is a fun place to work, and we recognise that their happiness is key to their success.

We have always strived to foster an egoless environment, where the team works as a unit, and staff are given independence instead of being subjected to an oppressive, hierarchical regime. All colleagues are treated with respect, and this helps ensure that we have remained successful in staff retention for so long. We also maintain a collegiate atmosphere through organising events for staff, such as setting up a house system akin to those in schools, in which the firm is divided into four houses which compete against one another in activities such as sports days and quizzes throughout the year to raise money for charity.

This culture gives staff a competitive edge and helps attract lawyers who buy into the firm’s ethos and see it as the best place for them to thrive.

We believe that skilled, valued and engaged employees are key for growth and vitality, as our own experience has proved. Our approach to employee wellbeing at Lawrence Stephens is a value aligned with our promises to our clients: that we are proactive, collaborative and personal. Among other initiatives, we created the Lawrence Stephens Wellness Project, which was initiated and led by an associate in our Real Estate Finance Department, who is also a certified Health Coach. By strengthening the holistic wellbeing of our staff, employee satisfaction and engagement rates have risen, and add to the general sense of workplace happiness present across all divisions of the firm. We strive to continually strengthen the wellbeing of our staff through this project, and by supporting their personal and professional endeavours in every way we can.

We take a hands-on approach to widening the horizons of our staff, for both their benefit and the firm’s. To that end, we established a professional networking event series, LawLinks, that is only open to trainees and lawyers qualified for less than 2 years, to give young professionals the chance to develop essential skills and learn from their peers. Recognising the impact of the pandemic on opportunities for face-to-face meetings and learning, LawLinks was established to bring people back together across all disciplines. We encourage our young staff to invite attendees, allowing them to connect with peers, colleagues and friends, and to develop new relationships at the same time. This approach reflects our wider commitment to our staff’s personal growth and development.

Our entrepreneurial spirit also led the firm to be selected by FE/BE (For Entrepreneurs, By Entrepreneurs) as part of their Growth 100 Project, which produces an annual list of the 100 fastest growing companies and thereby helps to identify, amplify and mentor growing business at various stages of their development. We were chosen as legal partners for the project not just because of our legal expertise, but also in recognition of the founders’ entrepreneurial spirt at the heart of our business, and our deep understanding of the issues and concerns faced by growing businesses.

For my part, the skills and lessons I have learned since setting up the firm and during day-to-day management have been manifold, and I retain a strong passion for sharing the knowledge gained with others seeking to chart a similar course as business-owners and entrepreneurs. My drive to build a successful business staffed by happy, confident employees is one of the keys to the firm’s growth, and we as a firm take great pride in the opportunity given to us by FE/BE to share our expertise with others.

As a business owner myself, I believe my greatest asset to be an ability to understand my clients’ businesses and key objectives through both an entrepreneurial and commercial lens. I strive to maintain an open-minded and approachable manner to ensure that clients’ objectives are met within the desired timeframe, and to exceed their expectations as well. This is aided greatly by my commitment to working collaboratively with my clients, and has always been a feature that we have sought to embed into the firm’s overall approach to its client base.

As a firm, our collective entrepreneurial attitude has also helped us build strong and lasting relationships with clients who own businesses, thanks to our ability to stand in their shoes and advise them how best to deal with any legal issues they face. Our first-hand knowledge of the challenges of founding and growing a business has, we believe, added real value to these clients, who take comfort from receiving advice from a team with a decades-long proven track record of growth and success.

This approach has allowed us to form long-term and close relationships with our client base, and we strive to remain by their side throughout the life cycle of their businesses. We show the same enduring commitment to their companies as we have always done to our own.

We plan to continue this growth over the coming years, using our tried-and-tested, highly successful model, as we continue to foster the firm’s excellent workplace culture, and help our colleagues grow and develop their careers.

From our humble beginnings, we have grown to become a substantial and powerful operation, constantly expanding and seeking further success. With our numbers continuing to swell, we are expanding our Farringdon premises, bringing in new systems and technology and undergoing a holistic rebranding. This upgrade will greatly assist in solidifying our position as a full-service law firm, able to fulfil all of our clients’ needs.

Lawrence Stephens’ entrepreneurial spirit will remain the key to our success over the coming years, with our drive and commitment being replicated by our staff, whose efforts have helped deliver so much success since our earliest days.

Goli-Michelle Banan argues that there is still appetite for lending in the housing market in FTAdviser, Today’s Conveyancer and Mortgage Solutions

Posted on: February 24th, 2023 by AlexT

Director and Head of Residential Real Estate Goli-Michelle Banan highlights the calming of the UK housing market and positive trends related to reducing interest rates and lenders’ increasing willingness to lend.

Goli-Michelle’s article was published in FTAdviser, 6 April 2023, which can be found here, Mortgage Solutions, 30 January 2023, which can be found here, and in Today’s Conveyancer, 24 February 2023, which can be found here.

The UK housing market had a rollercoaster ride last year: house prices hit record levels, the Bank of England’s base lending rate increased nine times in the 12 months to December 2022, rising from 0.25% to 3.5%. It created a lull in market activity and put the brakes on property prices.

So, what next? Optimists argue that a crash will not happen with current mortgage rates predicted to fall by up to 25% this year. They also point to big lenders – HSBC, Barclays, Lloyds and NatWest – agreeing forbearance measures to help struggling borrowers: switching them to interest-only or competitive fixed-rate deals. Around 1.8m people will need to re-mortgage when their fixed-rate deals expire this year.

Schroders research shows that average UK house prices are more than eight-times average earnings; in London, that ratio rises to 11 times. Such stories make good headlines, but the economic mood is gradually changing – from general gloom to a more nuanced outlook. Notably, the shift in economic sentiment is reflected by reducing rates for new 2-year and 5-year fixed mortgages: after rising from 3 per cent in January 2022 to spike at 6.5 per cent last October, they have since fallen back towards the 5 per cent mark.

For potential buyers, interest rates are critical because they directly affect both affordability and lenders’ willingness to lend. After a decade of low interest rates, recent sharp swings have been unsettling.

Assorted lenders – Santander, Barclays, Nationwide and Halifax – now forecast imminent rate reductions to average around 4.5 per cent. Unusually, this comes as base rate is anticipated to reach 4 per cent later this month.

Mortgage rate cuts by big commercial lenders make the market more attractive and more affordable for domestic and first-time buyers – not just to overseas or cash buyers as happened when rates hit their recent highs. Despite media hype about reducing their mortgage lending, banks still have the appetite to lend.

After last year’s shocks, calm has returned. Much has been digested by the market, including the ‘new normal’ in interest rates. Potential increases are now factored into people’s thinking, so industry professionals can advise with greater confidence on where rates may head next.

Whenever the UK housing market is reportedly down, history shows it is never down for long. Buyers with available funding should press ahead on properties they really want. Good housing stock is not always available: in busier markets, people often lose out because of increased competition. Only those who are not yet able to buy should be waiting.

One caveat arises: UK incomes need to increase in real terms to boost domestic buyers’ purchasing power.  Without that, the market may still remain more attractive to overseas and cash buyers.

Gareth Hughes discusses the need for reform of the Inheritance Tax regime

Posted on: February 21st, 2023 by AlexT

Director and Head of Private Wealth and Succession Planning Gareth Hughes explores the sharp rise in Inheritance Tax receipts, and the accompanying need for reform.

Gareth’s article was published in Taxation on 20 February 2023; WealthBriefing on 21 February 2023; International Adviser on 23 February 2023 and Accountancy Daily on 1 March 2023.

For years, the likes of the Daily Mail and Daily Telegraph have railed against the strict nature of our inheritance tax system, reflecting their largely affluent readership’s disquiet with the thresholds set by the Treasury. Now, however, even Eastenders is running storylines on the subject, as its scriptwriters respond in time-honoured soap opera fashion to issues dear to viewers’ hearts. The inclusion of the tax plot in one of the nation’s favourite shows reveals that the thorny issue of death duty is stirring up tension amongst an even wider section of the British populace, as more families find themselves faced with steep inheritance tax bills.

Inheritance tax receipts have soared in recent years, laying bare a growing imbalance in terms of who actually pays their way. Loopholes continue to be exploited by the super-rich, many of whom deploy trust funds and bank accounts in tax havens to shield their wealth from the Exchequer, leaving the burden for the increased receipts to be shouldered by growing ranks of middle-class citizens.

This current state of affairs is entirely at odds with the original post-war remit for inheritance tax, namely to curb the inherited wealth of the upper classes and bring about a more equitable society as a result. It is little wonder that the tax is viewed in such a dim light by so many UK taxpayers, who watch their own inheritances being eroded while those higher up in the financial pecking order suffer no such similar fate.

After the death of Queen Elizabeth, a poll found that two thirds of the British public believed that King Charles should be liable for inheritance tax on the private wealth he inherited from the Queen, a sum estimated just shy of £150 million. While there is little prospect of the law being changed to force monarchs to pay the tax, the poll was, like the inclusion of the recent Eastenders storyline on inheritance tax issues, illuminating in terms of reflecting the growing opposition to the disparity between the upper and middle classes when dealing with the death duty.

Recognising this increasing unease among voters, lip service is paid often by politicians about shaking up, or even abolishing, the tax. However, firm action is yet to be taken, and is long overdue, especially in the current economic climate. The cost-of-living crisis, coupled with soaring inflation, has disproportionately affected the lower and middle classes, yet it is they who find themselves leaned upon to contribute the most in inheritance tax year after year.

The irony of the situation from the Treasury’s perspective is that, even though inheritance tax take doubled year-on-year and almost tripled since 2011, the total sum from the duty is a drop in the ocean compared with the total sums raised from all other tax channels. Given this, it is hard to see why the government persists with the current inheritance tax regime when it raises so little revenue, yet raises so many hackles in tandem.

The rates of tax applied are a particular bone of contention, given the soaring cost of properties in recent years, especially in the South of England. Whereas once a residence nil rate band of £175,000 may have seemed appropriate given the average house price, in today’s property market, such a threshold is far too low, and consequently drags more and more families into having to pay tax on wealth passed down by their relatives.

The nil rate threshold of £325,000 is also becoming increasingly obsolete, having not been raised since 2009. The refusal to reset the figure means that inheritance tax is functioning as a stealth tax on the middle classes alone, and many are beginning to feel both the economic and emotional stress as a result. The recent announcement that the thresholds will be frozen until at least April 2028 means that there is no respite coming anytime soon, despite there being a clear and pressing need to tackle the problem.

Adjusted for inflation, the thresholds would be significantly higher if fairly calculated. The nil rate band would be over 40 per cent higher, at £460,000, while the residence nil rate threshold would be 14 per cent higher at around £200,000. Little wonder that there is such a clamour for change amongst campaigners and the general public alike, although the appetite for change at the political level seems far more muted at present.

One workable suggestion would be to radically increase the nil rate threshold to £12 million, in line with federal tax law in the US, although many countries have no death duties in place at all, which would affect calls to simply replicate the US regime rather than consider the tax statutes elsewhere.

Alternatively, another viable option would be to raise the threshold on untaxed gifts between relatives. The current £3,000 annual tax-free threshold is set far too low, and should be replaced by a lifetime threshold of £1 million, which would greatly ease the strain on so many families affected by the current system.

The steep rise of inheritance tax receipts over the last decade is indicative of a growing problematic relationship between taxpayers and the Exchequer, and must be addressed urgently in order to prevent further damage being done. The effects of rising property prices and general inflation need to be reflected in new, more equitable thresholds set by the government, in order to finally make inheritance tax law move with the times.

James Lyons explores the Dignity takeover deal and its implications for mergers and acquisitions.

Posted on: February 9th, 2023 by AlexT

Director James Lyons examines the Dignity PLC takeover deal, and discusses the implications of this for the mergers and acquisitions market and the power of shareholders.

James’ article was published in Law360, 9 February 2023, and can be found here.

Before many bankers’ New Year’s Eve hangovers had even cleared, UK plc was given a rude awakening by the first British takeover approach of 2023. A consortium led by insurance tycoon Sir Peter Wood made an offer for funeral provider Dignity, which was immediately recommended to shareholders by the company’s management, bringing to a swift end Dignity’s near-20-year listing on London’s stock exchange.

While early investors were well-rewarded by the meteoric rise in Dignity’s share price, recent years have been less kind to holders of the stock, with the company’s value at the time of Wood’s approach a mere fifth of its 2016 peak. Steeply rising costs had hit the company hard of late, and the markets had been even quicker to punish the share price on the way down as they had been to reward it on the way up.

With no imminent change in market sentiment in sight, not least after long-running, bruising battles with activist investors agitating for change, management clearly saw little runway in maintaining its stock market listing. Wood and his backers offered a way for the board to attempt to turn the ship around and return to long-term growth and profitability, especially given all of the funds earmarked for investment by the consortium.

Dignity’s public-to-private path is one well-trodden down the years, and the companies opting to change course so drastically are not only those down on their luck. While Dignity had been on a downward spiral for over half a decade, plenty of firms riding high also prefer to go private as a way to maximise company growth and shareholder returns.

While there is a clear benefit to firms seeking investment to do so via IPO (Initial Public Offering) and listing on the stock exchange, over time there can often seem ever-decreasing benefit to remaining a public company. The vagaries of the stock market, the capricious nature of investors, and general economic volatility can all weigh heavily on a company’s share price, piling pressure on management to deliver short-term results ahead of concentrating on longer-term goals, simply to buoy the stock price.

Such measures may be entirely at odds with managements’ view of the company’s best interests in the longer term, and result in counter-productive outcomes for staff and shareholders alike. Yet many boards nonetheless end up bowing to the demands of vociferous investors, whose voices nowadays are amplified even further by instant communication and ubiquitous social media platforms to air their criticism.

Such fear of rebuke, especially for boards of mid-to-small cap companies, has inverted reality to the point that they themselves believe that the share price dictates a company’s fortunes rather than the other way around. Share prices are by definition a reflection of investors’ attitude to a particular stock, rather than a guide to how well the company is performing or will perform in the future. Management should always ask themselves what decisions they would make if their company was private and thus there was no share price to worry about, rather than feel forced to merely react to others’ reactions to the current stock value.

If the answer to the above is that they feel compelled to make certain decisions in the short term to appease shareholders that may go against their better judgment for the company’s longer term future, then there is clearly scope for considering whether a public listing is worth maintaining at all. What may have once seemed appealing as a means to access institutional investment, create share liquidity and garner prestige by having a stock market presence at the start of the company’s journey may at a later stage become the very albatross round its neck that holds it back from future development and growth.

As well as the time and money spent debating and placating disgruntled investors in times of distress, management of public companies have to shoulder the day-to-day burden of compliance with the demands of market regulation and listing rules in order to maintain their firm’s listing. Having to report results on a quarterly or half-yearly basis and constantly update the market on any significant new developments in the business is a costly exercise, and also has the effect of exposing the company to regular parsing, analysis and micro-management by exactly the type of aforementioned investors who may forego long-term company growth in favour of myopic, short-term share price flips.

Freedom from such enforced transparency can be a boon for many companies, allowing them to carry out corporate restructuring and M+A activity far from the madding crowd of investors, analysts and commentators alike. Management can thus focus on a longer-term strategic outlook, including staff retention and rewards.

However, whilst there are benefits to privacy there are also inherent potential pitfalls. The removal of market compliance and reporting requirements allows more scope for any managerial misdeeds to go unchecked, and thus the lack of public scrutiny needs to be replaced by solid corporate governance and strong reliance on watertight auditors and robust legal representation.

At the same time, if the only way for a public company to secure a private takeover is to become saddled with significant debt to help service the financing of the transaction, as is the case in many such buyouts, caution must be applied when judging how much extra financial burden the company is sufficiently equipped to take on. Leveraged buyouts of public companies have often proved a recipe for disaster in recent years, especially in cases where new owners are seen as using the purchased company as either a means to strip assets or siphon cash from the business, at the expense of long-term growth and success.

As such, custodians of a company have a keen duty to all stakeholders, not least the workforce, to ensure that any potential suitors are genuinely well-intentioned, rather than a wolf in sheep’s clothing.

2023 finds UK plc still reeling from the twin economic blows of the pandemic and the war in Ukraine, both of which have had major consequences across all sectors of the stock market, and which have left countless firms teetering on the brink of collapse. The uncertainty which abounds provides clement conditions for pairing up between private equity and public entities, and M+A activity is likely to steadily increase over the year ahead, as initially evidenced by the Dignity takeover so early in the first quarter. Given the parlous state of the global economy, it is understandable that many boards feel panicked into action to restore shareholder value, but it is important that they avoid rash, rushed decisions for their companies’ futures. Often, the private arena offers a calmer, more rational setting for strategizing for the long-term than the pressure cooker environment of day-to-day traded markets, and as such should be seen as a viable option for many companies who previously may not have given such relocation a second thought.

James Lyons comments on the creation of shareholder value in Law360

Posted on: February 2nd, 2023 by AlexT

Director James Lyons comments on Immotion Group’s £25 million to offload its location-based entertainment business, and the impact this has on shareholder value.

James’ comments were published in Law360, 02 February 2023, and can be read here.

“This is a good example of management seeking to balance the creation of shareholder value in both the short term and the long term, and of the importance of being proactive and nimble in the current economic climate to meet the demands of the business and its shareholders.

“The sale of the LBE business enables Immotion to deliver an immediate return to shareholders in excess of the current share price, whilst the company’s new sole focus on the HBE business together with the further capital at its disposal helps it to solidify the opportunity to deliver enhanced long term shareholder value in a growing sector.”

Steven Roskin discusses trends in the first-time buyer market in Property Today

Posted on: February 2nd, 2023 by AlexT

Director Steven Roskin explores trends in the first-time buyer market, and the factors affecting it.

Steven’s article was published in Property Today, 02 February 2023, and can be found here.

The UK residential property market has faced changes and challenges in the last few months, and this has led to a quieter period for estate agents and solicitors compared to the hectic market of the previous couple of years.

In the aftermath of the initial covid shock and stumble to the property market, we saw a very buoyant two years of transactions aided by the stamp duty holiday and the desire of people to move to different locations and property types. This was always going to taper off at some point, but it perhaps did so quicker than expected with the combination of increased cost of living, economic uncertainty and the infamous mini-budget which saw mortgage interest rates rise much more sharply than had been anticipated. Transaction levels gradually decreased between October 2022 and January of this year, and HM Land Registry records show the number of applications for transactions for value was 15% less in December 2022 compared to the previous December.

First-time buyers have of course been affected by the recent turbulence and have faced the biggest challenge of everyone in the last year: to get onto the property ladder. A few factors have contributed to this, and in the short term, the changes in the mortgage market have certainly played a part. Those that have worked hard to save a deposit have suddenly found themselves needing a larger deposit to get a mortgage. Many of them have also had to re-assess what they can afford, as increased mortgage rates meant monthly mortgage costs being hundreds of pounds more than they would have been six months ago.

At one stage, it was reported widely in the media that mortgage rates could reach 6-7% later this year, around three times higher than they were in the summer of 2022.

When adding in the increased cost of living, and in particular the energy costs associated with owning a home, it is not surprising that first-time buyers would have needed to pause and take stock before taking that big step in their lives of owning a first property. Other factors such as the ending of the government Help to Buy scheme in October 2022 (for new applications) meant assistance and incentives are currently harder to come by.

Despite these challenges we are still seeing first-time buyers active in the market and more generally there has been signs of an increase in interest and transactions as January has progressed. Estate agents that I have spoken to have reported being busy with viewings and ultimately deals being agreed including with first-time buyers. Perhaps the stock taking has largely concluded and an acceptance has set in that higher mortgage rates are here to stay but at least not looking likely to reach as high as was initially feared. The general principle remains that the UK is a country where aspiration for property ownership has always been strong. In addition, renting remains expensive, especially in the cities and so while the goal posts might have been shifted, the aspiring first-time buyer would understandably want to still get on that ladder.

To achieve this, it may require for the time being and in current circumstances that buyers stretch themselves that little bit further in terms of deposit and monthly mortgage payments. Some may need to make a new or amended application to the ‘bank of mum and dad’ to help them get what they want. There has also seemingly been a shift to more of a ‘buyer’s market’, meaning negotiation of price might be easier than it has been for the last couple of years.

Another change recently reported by lender Halifax showed that in the last decade there has been a noticeable increase in the number of buyers joining up to purchase a first property together. The report showed that 63% of first-time buyers purchased in joint names in 2022, compared to 43% in 2014. This is presumably down to property price increases generally in that period and the greater need to pool together resources to get on the ladder amongst younger buyers. It is nonetheless another example that while adjustments in expectations and circumstances may affect buyers and the market, the desire to buy and own property remains prevalent, and first-time buyers continue to be an active and important part of the market. The need for good financial and legal advice for these buyers is as great as ever, but first-time buyers are likely to remain as a high proportion of those buying, lending and driving the market forward.  

Anne Wright discusses professional indemnity insurance, development finance and what to look for – and action

Posted on: February 2nd, 2023 by AlexT

Consultant Anne Wright offers some guidance to lenders on what to look out for in respect of professional indemnity insurance from their borrower’s professional and construction teams.

It will be of no surprise that since 2018 the insurance market has hardened across most lines, with increased premiums and market capacity dwindling.

The insurance market is cyclical, however, and additional economic factors have undoubtedly affected this, such as the vast number of claims following Grenfell in 2017 and high number of insolvencies during the pandemic. It is reported that the UK PII market has approximately halved, and some insurers have withdrawn from the market altogether.

Key risks are becoming increasingly difficult to place for everyone.

In the construction industry, it is now common to find that contractors and professional consultants do not hold (or are struggling to obtain) professional indemnity insurance (PII) at the level and on the terms that either were originally negotiated and agreed with their employers and employers’ funders, or are simply not now obtainable at the outset of a development financing.

Insurers are issuing PII policies that are subject to greater exclusions and/or sub-limits in relation to (in particular) combustibility cladding and fire-safety claims. The fact that PII coverage is being restricted at a time when contractors and professional consultants need it the most is concerning. In some cases, it may lead to insolvency, as fire and cladding claims are high value – combined with the fact that larger contractors in particular, are more likely to face more than one claim in respect of their projects at any given time.

Given the current economic constraints impacting the construction industry, even greater scrutiny is needed at the initial stage of a development financing by all lender professionals.

Notwithstanding the PII market and other economic factors facing the construction industry, there are some practical steps that can be considered by lenders and borrowers to better protect against these risks:

  • Consider instructing a greater in-depth enquiry into the financial standing of contractors and key designer professional team tenderers, prior to any offer or lending facility is awarded. In recent more economically stable years, the use of outside investigation agencies has been less frequent, but these agencies should perhaps be considered again and more widely, as a prerequisite to an offer of finance.
  • Monitoring Surveyors appointed by lenders should require evidence of PII levels and terms as soon as instructed and be asked to comment on whether the same are appropriate for the project as against what is available in the market – and from whom. Due diligence conducted either in house or by external lawyers should not only ensure that each project participant carries the correct level of PII by reference to broker’s letters or certificates, but also that the same are actually “on foot” and live, and that it has not either initially or over time been varied by endorsement and/or excluded risks.
  • Insurances underwritten outside the UK market are also being offered in the alternative by professional consultants and contractors. It will be necessary to verify therefore whether the same is acceptable as a matter of jurisdiction and whether it is possible to pursue a claim in the English courts.
  • It is crucial to make sure provision is made in the construction documentation for early notice of changes in coverage to be given by the project participants to the lender’s Monitoring Surveyor so that action can be taken to limit any potential risk gap as soon as it is made known either with the assistance of the employer borrower’s own insurers or by assistance being given as to what might alternatively be available in the market. Contractor and Professional Team Collateral Warranties in favour of the lender are now more important than ever and should be prepared and executed carefully by reference to a market standard principle agreement of which it is collateral.
  • The terms of both the principle agreements and collateral warranties should be considered in light of what might be requested for inclusion of a “net contribution” provision. In the event that the employer borrower has defects claim against an under-insured or non-insured contractor and/or professional consultant the employer – and necessarily the lender – may be able to spread its risk by joining those who may be responsible (consultants, subcontractors, design consultants) to the claim. Net contribution provisions limit this more general law of “contributory negligence” in such circumstances and should therefore be resisted.
  • Parent Company Guarantees with an appropriately long liability could potentially come to the rescue too – suggest that one is asked for if available. Performance Guarantees could also be considered, although they are of limited use as the UK market rarely provides guarantee cover on an on-demand basis leading to the employer/lender waiting a very long time to have its claim even considered.
  • Lastly, it may be worthwhile exploring whether “decennial” (ten-year latent defects) insurance can be taken out with an insurance broker. This needs to be thought about at the very outset, however, and is generally restricted to new developments or infrastructure projects.

It is important to remember that PII does not cover insolvency or poor workmanship and even if adequate PII is in place it will only covers a claim for negligent professional services provided to the employer. PII is not a solution for all things that may go wrong on a project therefore but increasingly lenders are requiring to place it increased reliance on this type of insurance.

Steven Bernstein discusses private ownership of businesses in Law360

Posted on: January 23rd, 2023 by Maverick Freedlander

Steven Bernstein, Senior Director in the Corporate and Commercial department and co-founder of Lawrence Stephens, argues that some companies fare best when owned privately, in Law360.

Steven’s comments were published in Law360, 20 January 2023.

Discussing Seraphine Group PLC’s £15.3M Takeover by Mayfair Equity Partners LLP, Steven commented: “From my perspective, it’s an interesting example that maybe not every business is well suited to be on the public market…

“And then there are some businesses that are just better owned privately, because there’s just a greater degree of flexibility, and you can make quicker decisions without the scrutiny that comes from being in a public space.”

Lawrence Stephens completes sale of Agility Risk and Compliance

Posted on: January 20th, 2023 by Natasha Cox

Lawrence Stephens’ Corporate team acted for The Agility Group in connection with the sale of Agility Risk and Compliance Limited to Opus Safety Limited, in a deal which was completed on the 17 January 2023.

Agility Risk and Compliance Limited, subsidiary of The Agility Group, provide tailored solutions to mitigate risk and improve compliance in Health and Safety, HR, Training and Occupational Health. Opus Safety Limited will expand its capabilities via the acquisition. Meanwhile, The Agility Group will concentrate on scaling up its core business in vehicle funding and fleet management solutions.

The deal was led by Senior Director, Jeff Rubenstein with assistance from Associate, Aashay Knights and Solicitor, Isobel Moran. The team worked collaboratively with the management team at The Agility Group in the sale of its non-core business, to allow them to focus on developing and expanding its main business, Agility Fleet.

Jeff Rubenstein, Senior Director, Corporate and Commercial comments on the completion: “It has been an absolute pleasure to act for The Agility Group on the sale of this non-core business. Keith Townsend and his team’s willingness and responsiveness made it possible for our team to act swiftly and complete the sale without delay. We’re delighted to see The Agility Group streamline resources and focus on the continued growth of its core business, and we look forward to working with them again”.

Keith Townsend, Chairman and CEO of Agility Group comments on the deal: “Having met Jeff on a number of occasions, I didn’t hesitate when he came recommended to act on this deal. The Lawrence Stephens team were always on call and any concerns were put to bed by Jeff who demonstrated a great deal of commerciality as he put my mind at rest on a number of occasions. Jeff and his team, including Aash and Izzy ensured a fair and balanced deal was struck, and I couldn’t have asked for more.

With the sale out of the way, the team at Agility Group are keen to re-focus our efforts on Agility Fleet, to maintain our position in the market as one of  the leading independent providers of vehicle funding and fleet management solutions in the UK”.

Lawrence Stephens completes significant acquisition for HFMC Wealth

Posted on: January 17th, 2023 by Natasha Cox

Lawrence Stephens’ Corporate and Commercial, and Banking teams acted on behalf of HFMC Wealth on the acquisition of R&S Associates Financial Planning Ltd in a deal which completed on 16th January 2023.

The deal was led by Senior Director, Jeff Rubenstein with Corporate and Commercial support from Solicitor, Isobel Moran who assisted on the acquisition, Associate, Aashay Knights who assisted on the acquisition and banking, Solicitor, Lucy Cadley who assisted on the banking and Head of Banking, Ajoy Bose-Mallick.

The Lawrence Stephens teams worked cohesively and efficiently to get the significant transaction across the line in order for HFMC Wealth to continue its strategic growth plans in 2023.

R&S Associates Financial Planning Ltd advises over 100 families over multiple generations, and the acquisition will see all client-facing staff retained and supercharge HFMC Wealth’s London office.

Jeff Rubenstein, Senior Director, Corporate and Commercial, comments on the deal: “We are delighted to have completed yet another significant acquisition for HFMC Wealth, in a deal which will see our client and friends accelerate an ambitious growth strategy to better service their clients. We understand that the team at HFMC are working hard to identify quality firms, and we look forward to working with them on their carefully selected acquisitions”.

Phil Patient, Partner and Group COO at HFMC Wealth comments on the deal: “We are thrilled that we have such a great team joining us from R&S. Of course, this wouldn’t have been possible without the help of Jeff Rubenstein, Isobel Moran, Aashay Knights, Ajoy Bose-Mallick And Lucy Cadley at Lawrence Stephens”.

As usual, their guidance was clear and invaluable to us and they understood what we were looking to achieve whilst being proactive and fair throughout for all parties.

On this deal in particular they displayed patience, creativity, tenacity and resilience to get the deal done,  despite the barriers put in front of them at times. We were very pleased the Lawrence Stephens team were representing us.”

Lawrence Stephens completes sizable transaction for Tri Capital Properties

Posted on: January 6th, 2023 by Natasha Cox

Late December 2022, Lawrence Stephens’ Commercial Real Estate team acted on behalf of Tri Capital Properties on the purchase of a mixed-use office investment for commercial and residential tenants.

The team was led by Director, Craig Mullen with assistance from Senior Director, Stephen Messias, Senior Associate, Angela McCarthy, Associate, Ana Aller and Trainee Isabella Tamlyn. The deal was exchanged at 11.30 pm on 21st December 2022 with completion taking place moments later, just before the midnight deadline.

The property boasts great views over Regents Canal, split into 4 separate buildings, comprising circa 30,000sqft of office, retail and residential use classes, and commanded huge demand. With multiple prospective buyers, it was crucial for the Lawrence Stephens team to act swiftly on behalf of Tri Capital Properties to maintain their position in the UK property arena.

Craig Mullen, Director in the Commercial Real Estate team comments: “It was a pleasure acting on behalf of the ambitious team at Tri Capital Properties. We’re thrilled they’ve been able to snap up this exciting asset management opportunity and we look forward to working with them on many more transactions”.

Lawrence Stephens completes £2.8M deal for United Trust Bank

Posted on: December 21st, 2022 by Natasha Cox

Lawrence Stephens’ Real Estate Finance team acted on behalf of United Trust Bank’s Structured Finance team to complete the refinance of 9 commercial and residential properties with a loan of £2.8M. The funds were also utilised to purchase the shares of a company registered in the British Virgin Islands and for the refinancing of existing debt held by that company.

The Real Estate Finance team, led jointly by Sona Shah and Stavros Theophilou with support from Vidhushan Sujenthiran, worked to incredibly tight timelines, during which they overcame multiple hurdles and obstacles throughout the transaction. With an acute appreciation for the importance of speed and precision, the team worked efficiently to complete the significant deal prior to the festive period.

This transaction adds to a successful week of completions for United Trust Bank, with Sona having also completed a £1M loan for UTB in the same week; securing a commercial property in the newly generated Nine Elms area.

Stavros Theophilou, Director in the Real Estate Finance department at LS comments: “It has been a fantastic year for UTB’s Structured Finance team, and we are pleased to have completed yet another significant deal for our longstanding client. Despite some challenges along the way, the willingness of the Banks team and their introducing broker, combined with the responsiveness of LS team, enabled us to act purposefully and achieve successful completions”.

Adam Ware, Business Development Director, Structured Finance at UTB comments: “We are pleased to have closed another loan with the support of Lawrence Stephens. This was the type of deal for which UTB structured finance has a reputation for delivery, blending refinancing, share purchases, multiple jurisdictions and, of course, time pressure. Lawrence Stephens have a detailed understanding of our offering and approached the deal and its many hurdles with speed and tenacity. We look forward to closing more transactions in the new year.”