Author: Ben Debski

One of South Africa’s largest law firms, Cliffe Dekker Hofmeyr, is a national, full-service practice, with more than 130 directors (partners) and some 280 lawyers, located in offices in Johannesburg and Cape Town, South Africa’s key financial centres, with a pretty even split between the two cities.

The firm’s roots go right back to 1853 and since then it has evolved and grown through a series of mergers.

In 2005, Cliffe Dekker, as it was then, became a member of DLA Piper Group and so became the first South African law firm to enter into an exclusive relationship with a global legal practice.

DLA Piper Group is part of DLA Piper, which is among the largest legal services organisations in the world, meaning that Cliffe Dekker Hofmeyr can introduce its clients to lawyers in more than 25 different countries. DLA Piper is the only legal services provider to have more than 2,500 lawyers working on the two sides of the Atlantic. With a total of 3,700 lawyers globally, working in 65 countries throughout Asia, Europe, the Americas, the Middle East, and Africa, DLA Piper offers a truly worldwide spread of first∞rate legal advice.

The most recent milestone in the firm’s continued development has been the combining of Cliffe Dekker and Hofmeyr Herbstein & Gihwala, two of South Africa’s leading corporate law firms, which took place on September 1st, 2008.

Announcing the deal, Dines Gihwala, Chairman of the new entity, commented: “I am truly excited about the future of Cliffe Dekker Hofmeyr. This combination is the product of two firms of similar size, with almost identical cultures, values and solid reputations.

“My colleagues and I anticipate taking full advantage of a culture that truly binds and builds in order to offer a first-rate legal outfit with the critical mass and depth of skills to continue adding value and providing a competitive edge for our clients.”

Added CEO Chris Ewing: “With the merger now fully effective, we are ready to entrench ourselves as the business law firm of choice in South Africa, offering a complete solution to our clients’ legal needs.

“Addressing the skills challenge and transformation imperatives remain top priorities. We will strive to continue being the employer of choice for both aspiring and already established practitioners and are intent on offering an attractive environment for the best talent in the industry to develop and grow.

“Our clients and our people are at the heart of everything we do around here, our aim is to offer a service that provides access to in-depth skills, supported by the capacity to meet the challenges and requirements of our clients, whatever their size and wherever they may be, without compromising the highest possible level of service.”
 
Comprehensive and coordinated
With the combined capabilities of two top-tier corporate law firms, the new Cliffe Dekker Hofmeyr entity has the capacity to provide a comprehensive and fully co-ordinated range of business legal services to clients whose needs are local, national or international in scope.

The firm has one of the largest corporate M&A and commercial practice teams in South Africa, with more than 70 qualified lawyers, who work closely with other practice groups across the firm to cover such issues as competition, employment, pensions, tax and regulation and the firm uses its formidable global resources on international aspects of cross-border transactions.

The two legacy firms have long been recognised as champions of transformation and empowerment in the legal profession and, post-merger, some 30 percent of the firm’s shares are held by black directors, with some 24 percent being held by women.

Says Ian Hayes, National Head of the firm’s corporate and commercial practice: “Today we offer the full range of business legal services, with a principal focus on corporate and commercial law and working in 10 core areas: corporate and commercial, including intellectual property, competition, dispute resolution; litigation and arbitration, employment and labour issues, environment; finance, projects and banking; real estate, tax, technology, media and telecommunications, and trusts and estates. “We also have niche practices that focus on the specific requirements of a number of industry sectors, including aviation, banking, energy, financial services, healthcare, hotel and leisure, infrastructure and PPPs, telecoms, media, manufacturing, mining, outsourcing and liquor.

“Our business has grown substantially in recent years, driven by our clients’ considerable investment and expansion initiatives, not only in this country but across the African continent and beyond.

Diverse projects
“DLA Piper’s capability in Africa is unrivalled in terms of geographic coverage. Our lawyers on this continent have extensive experience in mergers and acquisitions, foreign direct investment, finance and telecommunications. Together with other DLA Piper Africa Group lawyers, our firm has worked on a number of very diverse projects, including a listing in Zambia, a mining project in Tanzania, a shopping centre in Angola and a shipping transaction in Mozambique.

“As the pivot of the continent, South Africa is an interesting place to be working in at this time. The global slow-down is having its effect, of course, but there are also changing local conditions to be accounted for.

“Whilst our banks generally appear to have only limited exposure to toxic debt – thanks to the restrictions imposed on them by the South African exchange control authorities – the economic crisis is nevertheless affecting them adversely because of the reluctance of European and American banks to lend to developing countries in the current circumstances.

“This is unfortunately slowing down the pace of black economic empowerment (BEE) in this country because funding is now in very short supply and is extremely expensive. “However, BEE transactions do continue to take place because of the legislative and strategic imperatives that drive these transactions.

“At this stage, the government has not taken any active steps to assist South African business in weathering the current economic storm. However, it will probably need to act soon as it is clear that the country will have difficulty in meeting  the forecast growth rates and there must be a real possibility of considerable job losses, especially if bankruptcies result because of the banks’ refusal to provide funding in the ordinary course.

“In the short term, South Africa faces a number of difficulties, most of which are not of its own making and are rather the result of the global crisis that is embroiling us all. However, the medium and long-term outlook for South Africa and the rest of this continent is, I believe, extremely bright, with high growth rates still being predicted in the long term.

“There is an increasingly potent Pan-African, and beyond that, global trend in the way things are developing here. This is what makes our association with DLA Piper of such importance.

“As things are playing out, it is becoming clear with regard to our merger that the combination of these two vibrant entities into a single unit has created a depth of skills that offers our clients service which is of an exceptionally high quality. The merger enables us to offer ever-higher levels of specialist knowledge and experience for the benefit of our clients while the international dimension provided by our DLA Piper connection gives them a window on the world.

“The merger also enables us to expand our in-house training facilities and concentrate greater resources in the marketing arena. It’s an exciting place to be.”

Successful centenarians know a thing or two about growing up in the world. It’s tough, it’s competitive, and it involves looking after friends in an ever-changing environment. Adams & Adams celebrated its Centenary in 2008.

Core values have changed little since the firm’s creation in 1908, with a commitment to transformation in the workplace to better represent the demographics of South Africa, with maintaining service excellence being at the  heart of the firm’s vision for the future.

New projects to celebrate 100 years included increasing intellectual property awareness through a sponsored programme on Summit TV.

Publicity
The project was important both in terms of marketing and feedback from the programme. Summit is a local business channel aimed at high-level decision makers in the South African business world. Sky News also crosses to Summit TV on a daily basis. It was an ideal medium to publicise achievement across the firm and the positive feedback ensured the project’s success.

Several clients have ordered full sets of all the programmes from the channel for their internal use.

Adams & Adams is represented, directly and indirectly, in virtually every country in the world – making it one of the best-known intellectual property law firms. The key to success is maintaining good client relationships, which were established early on in the firm’s history by its founders, Harry and Eustace Adams.

New office
With offices in Pretoria, Johannesburg, Cape Town and Durban, the client base is vast. The firm represents local and international clients in more than 50 African countries.  The latest addition to the practice is an office in Maputo, Mozambique. Future plans are significant. The firm is actively investigating opportunities for new offices, especially in Africa.

Dario Tanziani says: “We are an international law firm with a predominantly IP practice, based in Africa. As interest in Africa gains renewed momentum, it makes sense for us to be looking to carry our well-established global brand into Africa, given our long years of experience and expertise in providing services to our clients on our continent.”

Remaining active across the African continent for 100 years is something of an achievement for any law firm.

New associates
As with any large organisation, a foundation for growth is in the establishing of new associates. In the past two or three years Adams & Adams’ senior team have concentrated much of their efforts into finding the best associates to work with in all African countries. Partners have travelled extensively to every country on the continent in search of the best and most cost-effective services for clients. Once new associates are found, they are then constantly evaluated to maximise their capabilities in Africa.

The legal work itself is sometimes complex and time-sensitive. A South African patent, for instance, does not extend to any other country. Because the country is a member of the Patent Cooperation Treaty (PCT), foreign clients who wish to obtain patent protection in South Africa should bear this in mind when extending their PCT International Phase filings to National Phase. They have up to 34 months from the earliest priority date to do so in South Africa at relatively low cost. An average PCT National Phase filing in South Africa costs between $1,000 and $1,300 from filing to grant.

Patent department
The firm’s patent department renders a full range of legal services in technical fields such as biotechnology, chemical engineering, chemistry and pharmaceuticals, electrical and electronic engineering, mechanical engineering, plastics and polymer technology, computer technology and civil engineering.

Services include everything from preparing patent specifications to filing and prosecuting them to grant in all countries which have a patent system; portfolio management; infringement and validity opinions; amendment advice; litigation; licensing; assignment and advice on exchange control implications thereof; advice on competition law aspects of licensing, enforcement and exploitation of inventions in general; and renewals anywhere in the world.

Due diligence audits and valuations, franchise structuring including finance of start-ups based on IP, as well as Plant Breeders’ rights registrations and enforcement are other specialist client areas.

The firm also has the advantage of having a true Commercial Law section, which can assist patent clients with aspects such as structured finance leveraged off their patent portfolio, start-up of companies, shareholders’ agreements tax advice and the like.

Although clients seek expert guidance, there are basic do’s and don’ts that the client must observe in order to file a successful patent application. The most obvious consideration is a common∞sense approach to confidentiality.

Secrecy
Dario Tanziani of Adams & Adams explained: “Clients should first of all bear in mind that South Africa has absolute novelty requirements, in other words disclosure of the invention anywhere in the world, by written or oral description, by use or in any other way, will destroy the novelty of the invention and render it unpatentable.

“So secrecy before filing is of paramount importance.”

To prepare and file a patent application, a client should provide a description of the invention, indicate how it differs from the state of the art in the relevant field, and drawings if appropriate and possible. The firm will take it from there and guide the client in personal consultation until it has prepared a patent specification, which is of the highest professional standard and properly protects the client’s invention, and file it at the South African or other relevant Patent Offices.
 
This service can also be offered to foreign clients and associates who may need to outsource their drafting due to capacity constraints. Another issue regarding client input is remaining aware of when a patent becomes lapsed.

Warning systems
Warning systems can be put in place to alert clients of imminent due dates for payment of renewal fees. A South African-granted patent will lapse if the prescribed renewal fee is not paid on the relevant anniversary date (PCT International filing date for PCT National Phase cases, local filing date for Convention or locally originating cases).

There is a six-month grace period during which a renewal fee can still be paid with payment of extension fines. Adams & Adams has a fully automated system in place, which sends out computer generated reminders to clients six months, and then again two months, in advance of the renewal due date, as well as two months into the grace period.

The firm will also send a reminder to the person responsible for the case to phone the client if it seems that the non payment is unusual and may have resulted from administrative problems on the client’s side.

Do mistakes ever happen?
If the Registrar can be satisfied on affidavit evidence that the lapsing was unintentional and that the application for restoration has been made without undue delay, then he will advertise the application for restoration in the Patent Journal for opposition purposes. There is a two-month opposition period during which anyone can oppose the restoration on proper grounds. If there is no opposition, then the Registrar will issue a notification calling for the outstanding renewal fees to be paid, and will then issue a Restoration Order.

Trade marks
Trade marks are another service area in which the firm specialise.The Trade Mark Department has a presence in the firm’s Pretoria, Durban and Cape Town offices. It currently has a professional staff complement of 25 partners, nine associates, six professional assistants, 13 candidate attorneys and 14 paralegals. The partners, associates and professionals are all qualified attorneys and most of them are also qualified trade mark practitioners.

Legal amendments can affect the type of trademarks that can be applied for in South Africa and the team remains alert to all industry changes.

There have been no recent amendments passed which affect the types of trademarks that can be applied for in South Africa, although there is an IP Laws Amendment Bill under discussion which would allow for ‘traditional terms or expressions’ to be registered, if passed in its present form.

‘Traditional term or expression’ means a term or expression which is recognised by an indigenous community as a term or expression having an indigenous origin and a traditional character and which is used to designate, describe or refer to goods or services. These could, in terms of the Bill, be capable of constituting a certification trade mark or a collective trade mark and a geographical indication.

Trademark prosecutions and enforcement help define the firm’s level of success and the benefits of using a top firm.

Success
In the year up to September 2008, Adams & Adams has filed 5,600 trademark applications. The Registry has issued 5,447 Office Actions in respect its clients’ applications so far. The firm’s success rate in responding to these is close to 99 percent. But a good a good legal firm, like any organisation, is not just about business know-how and knowledge, it’s about people. Training is at the heart of Adams & Adams and the services it provides to the client base of more than 15,000 people. In-house lecture programmes give all staff the opportunity to improve and update their legal knowledge and skills. Support staff too are encouraged to undertake studies wherever appropriate to improve their skills base and enhance their career prospects.

“Senior support staff serve as mentors to junior, less experienced support staff. Several support staff have made it through the ranks to managerial, paralegal and professional level,” said Dario Tanziani.
 
“We also sponsor a secretarial school for individuals from previously disadvantaged backgrounds and we draw from the graduates for our own staff or find alternative employment for them where appropriate.”

Growth
From a law practice with two partners, the staff complement has grown to 55 partners, 13 senior associates, 14 professional assistants, two full-time attorney-consultants, 40 candidate attorneys and 32 paralegals. Traditional standards of high ethics and professionalism have facilitated growth, but new technology is enhancing service delivery.

Two well-known software products have been customised and integrated over a period of more than one year. The result is believed to be a highly advanced IP and legal case management and electronic workspace system which will enable greater flexibility in working hours through remote access to electronic files.

“This will in turn enable faster turnaround times and more detailed record keeping, both of which will be to the benefit of our clients,” says Dario Tanziani. “These capabilities were but a pipe dream 20 years ago.”

There is more to come too. Through upskilling and lateral hire of talented lawyers, Adams & Adams is increasing its capabilities in the pharmaceuticals regulatory and competition law areas. As with any expansion, the risk associated with facilitating growth are evident, but after 100 years of success and growth the firm is not anticipating maintaining the status quo.

“We are facing significant challenges in these endeavours, not the least of which is the skills shortage being experienced in South Africa and abroad,” says Dario Tanziani.

“We are nevertheless confident that the strength of our brand, our commitment to service excellence and progressive outlook will attract young talent of the highest calibre and diverse backgrounds to both our support staff and our junior and senior professional ranks.”

Outside the United States and the United Kingdom, Michel Nader says, there are very few countries that run to massively large law firms – “and Mexico is not the exception.” So the firm in which he is a partner, Jauregui, Navarrete y Nader, may have a comparatively small number of people sitting at desks compared to some of the firms to be found in Mexico’s big northern neighbour, but at more than 100 professionals today, that still makes it one of the five largest firms in the country.

The firm has been in existence for 34 years, founded by a group of lawyers, including Alexander Hoagland, “and my co-partner Miguel Jauregui”. Nader says. Nader himself joined the firm in 1981 as a mid-level associate, after working for a prominent Mexican lawyer who was an expert in commercial law, and then working for a corporate firm, and became a partner in 1983.

Jauregui, Navarrete y Nader has been a leader in banking and finance “since its inception,” Nader says. The two core practices are banking and finance and mergers and acquisitions, but “we have other very important practices,
like infrastructure, real estate, insurance, telecommunications, intellectual property. In banking and finance world we basically do everything but we are very well known for our expertise in structured finance, securitisation, real estate finance, acquisition finance and a very broad range of work for financial intermediaries.”

The firm’s clients include domestic and multinational corporations, the multinationals being based both in Mexico and abroad. Though it does work for those clients abroad, “Mexican law firms, including ourselves, see most of our work happening within Mexico,” Nader says. Although, the amount of work being carried out outside Mexico, particularly in South America is increasing. This is not so much because of the language advantage – “anyone can speak Spanish nowadays,” Nader says.

“Speaking Spanish is a plus, but no one would hire a lawyer because he speaks Spanish.” Instead, he says, “the language element is obviously important, but more important to being able to work in South America is our understanding of the culture and the similarities of the legal systems, derived from the French legal system. In our world you are expected to speak a minimum of two, if not three languages, and understand the legal systems of several other countries as well.”

The industries covered by JN&N’s clients, Nader says, represent “a very wide variety, gas, energy, infrastructure, banking, insurance, real estate, pharmaceuticals, communications, a very wide range.”

Mexico is not immune to the problems spilling out from the credit crunch in the United States, and the impact of that crisis is having an effect on JN&N’s clients. “Today we’re facing difficulties of a different kind than we were facing a couple of months ago: we’re seeing a very steep credit crunch in the markets,” Nader says. “There will be very few places in the world that will not be impacted by the credit crunch in the United States, and it is affecting Mexico, and it will have a very deep effect in 2009, from our perspective.”

Trouble ahead
So far, unlike in the UK, Mexican financial institutions are not finding their very existence at risk, Nader says: “We don’t have any news about Mexican banks being directly affected by the collapse of the Lehmans and the like. But they will be affected indirectly, because there will be less money around and they will encounter defaults from their customers. I don’t think the Mexican banking system has shown any major signs of damage. However, there will be damage in the months to come because we will see an increase in defaulting loans, especially in consumer loans.”

The sort of toxic sub-prime home loans that have hammered financial institutions in the United States are not a feature of the Mexican financial scene, Nader says: “Home loans are divided in Mexico between the banks and the mortgage companies, but unlike what we have seen in other countries, in Mexico most of the mortgages are done with fixed interest rates, which is different to what you will see in the United States.” Even so, he foresees some problems to come: “There are some over-riding deficiencies in the market which will prompt an increase in non-performing mortgage loans, and as the job market weakens some of the borrowers will encounter more difficulties in servicing their loans.”

One problem for Mexico is that, almost inevitably, its economy is dependent upon that of its northern neighbour, something that became even more pronounced after the arrival of the North American Free Trade Agreement (NAFTA) in 1994. “The United States is by far our largest trading partner and the largest source of foreign investment in Mexico,” Nader says. “After NAFTA, US investment multiplied, but the problems in the US economy have put a sharp brake on investment activity. In the past couple of years the tendency has been more to stagnate or remain constant,” Nader says. “We didn’t see an increase in 2007, we’re not going to see an increase in 2008 and probably we will not see an increase in 2009.”

However, Nader cautions against blaming the financial crisis completely for this: “ It’s not only because of the credit crunch in the United States, but also because as a country we have not made enough structural reforms that would make investment in Mexico more attractive, that will distinguish ourselves from other countries that are seeking to attract foreign investment.”

Mexico has the advantages to build on to make it a come∞on to oversees investors, Nader says: “We obviously have a very large domestic market – we have a population of 110 million people. The middle class has grown in the last eight years or so – probably two or three million people have been able to buy homes, which is unprecedented. We have the attractiveness of the proximity to the United States, the attractiveness of being a tremendous alternative for maritime cargo, because all the ports of the western part of the United States are basically operating at full capacity, and they don’t have much room to grow and we have the possibility of Mexican ports as an alternative, so strategically we have a number of advantages. But as time goes by those advantages will not be enough to attract foreign investment unless we make further structural reforms.”

“We need tax reform – to the taxation at an individual level as opposed to at the large corporate level. We need to see a simplified tax system that will broaden the tax base and that will eventually replace an income tax with a consumption tax. That’s very political and there would be constituencies that would oppose such a reform, but unless we have such a reform the government will not be able to increase the number of tax payers and if we don’t increase the number of tax payers, it’s going to be difficult for the government to play a leading role in the development of infrastructure.

Our tax system is more geared to collect taxes than to foster growth – and thereafter collect taxes. I think that a country that has probably one million people joining the job market every year needs a tax system that will not sacrifice collections but that will defer collections for the sake of growth.

“We need reform in the energy sector, but also reform on our labour system and more efficiency in our judiciary. There has to be administrative simplification – there are too many barriers to being able to set up a business, both at the federal and the state level and you need an environment that is more prone to foster growth and investment. We are competing with the Brazils, we are competing with the Russias and the Chinas and with other Central American countries. So it’s a matter of being competitive.”

Even in the absence of these reforms, however, Nader sees growth opportunities for his own firm. “There’s going to be an increased level of M&A activity – on the banking side there will be fewer transactions but they will be more structured and they will require more ‘lawyering’. This is natural: we’ve just seen a credit crunch, lenders are now more strict with their lending standards and will demand more structured transactions. That’s certainly good for us: the market is going to be smaller but given our level of expertise, when market conditions get tight, we see the market coming to us because they need more complex advice, and not only more complex advice but also the possibility of having enough manpower to carry out a number of large deals at the same time.”

Nader certainly expects, as do almost all observers, an increase in regulatory requirements once the current crisis dies down, even on top of the changes brought in after the financial scandals earlier this century. After the Enron case and the passing of the Sarbanes-Oxley Act in the United States, lawyers’ workloads to meet new standards that were being imposed in the US increased in Mexico, and the same will be true post-credit crunch: “Obviously in the financial markets we expect quite a bit of reaction. I don’t see the United States staying where they are with regard to the regulation of financial intermediaries and other players. A tight credit market and increased regulation is going to be bad for some practitioners, but for others, like us, who have a great depth on the transactional and regulatory areas, will bring about great opportunities.”

On the domestic front the growth of middle classes in Mexico means good chances of growth in areas such as insurance, and JN&N is well-placed to capitalise here, Nader says: “We have the largest insurance practice in the country, we’ve done probably the largest insurance transactions in Mexico and we represent on an ongoing basis a number of insurance companies on their investment and regulatory matters. This will be an area that will continue to grow – growth will continue to be hampered in the next year, and probably beyond, but investors that have strategically positioned themselves will have good opportunities, and, obviously, for insurance companies that are well capitalised, in the mid∞term, a rising middle class means a lot of room for personal insurance growth in both life and health, as well as credit insurance growth, consumer goods insurance, even mortgage insurance.”

Some sectors will not do so well: “I don’t think savings will grow – there’s a scarcity of jobs, the rising middle class has many needs that have never been satisfied, televisions, fridges, all the way up to tuition fees, so the savings possibilities of the middle class are very narrow,” Nader says.  Real estate “has had a tremendous growth in the last six or eight years and it will continue to grow but we are seeing a slow-down.” JN&N is well-placed for when the real estate market picks up again, however: “We represent a number of the largest investors in the real estate sector and we also represent the most active lender in the real estate sector. We started representing this lender fifteen years ago and we got into the real estate practice 10 years before it became an important business for Mexican firms,” Nader says. “Like many things we do as lawyers, it is part opportunity, part luck and a lot of hard work. I’m the responsible partner for that client and when we started working with it I didn’t foresee the growth it would have. We were more focused on providing a good service to the client than thinking about 10 years down the road.”

One of the aspects of Mexico that many outsiders fail to be aware of is its size, and its diversity: the country is the 11th most highly populated in the world, and is divided into 32 state jurisdictions. Although it is the world’s largest Spanish∞speaking country, there are also more than 60 Native languages spoken within its borders. Nader says this diversity can be an opportunity for investors: “There are different regions, and you don’t find the same attitude towards business all over, even within a given state you find differences. It’s increasingly happening that different states are trying to compete with one another, and to widen their own tax base and their own base of investors.” JNN is happy to help out: “We have worked extensively with state governments to prepare reforms that facilitate investment in infrastructure projects, that allow them to have a more varied menu of alternatives, to allow private investment in infrastructure as well as financing of infrastructure projects.”

The firm’s culture, Nader says, is “basically, to serve the client with excellence – just like the old momma∞and∞poppa shops, the client is always right. But also embedded in the culture is the ideas of responsibility to Mexican society as a whole. We are regarded as one of the firms that has the most structured pro bono programmes in Latin America. In the past few years we have, on a pro bono basis, advised the government about a number of reforms, and that is something that is unique to our firm.”

JNN helped advise on reforms to the remittances system, through which $24bn flows every year from Mexicans working abroad, to ensure more of that money reached the people it was intended for. It has also advised the US Treasury Department and the US Department of Commerce over aspects of the North American Free Trade Agreement.

JNN has “an independent corresponding relationship” with Mayer Brown, one of the world’s largest law firms, with a presence across the Americas, Europe and Asia, and “we have very good working relationships with a number of large firms in the US and UK,” Nader says. He expects to see the firm grow organically over the next few years, and “we will recruit where necessary to gain skills we need to service our clients. But I don’t think we will see much consolidation among legal firms in Mexico – there are many cultural factors that get in the way.”

Growth in the future
As JNN grows, and looks forward to growth in the future, Nader says it is aware of the need to recruit and train. “We hire people when they are at law school and we train them and teach them, but we are not exclusive –  we think there is a lot of talent outside our firm and we recruit qualified lawyers from outside,” he say. “We spend a lot of time training our people – we allocate very significant resources, we need to ensure that clients when dealing with different people within the firm, get the same advice. We can’t afford to have inconsistency in the advice to clients.”

Tax payers’ money propping up our major banks qualfies was a moment in 2008 that most want to forget. When the UK government confirmed it had committed $64bn to a new rescue package, on Monday, October 13th, the global village took a deep breath, and prepared to watch events unfold for better or for worse.

But where there is risk, there is potential gain. Key sectors of the financial services industry are preparing to capatilise on attractive tax cuts intended to reignite national economies in the aftermath of October 13th. Salans is among the law firms well-placed to see its clients benefit as governments look for much-needed credit to swell their accounts.

“In an increasing competitive international market, tax is seen by many government authorities as a significant factor in attracting mobile inward investment to their jurisdiction,” says Karina Furga, who heads Salans’ Warsaw Tax Advisory Team in Poland.

“We anticipate that the use of fiscal policy by governmental authorities in this manner will continue. In countries where we are active and beyond, we are monitoring the development of the tax laws very closely.”

Salans was founded in Paris in 1978, and now has 20 offices worldwide in locations such as Prague, New York, Bucharest, Istanbul, Shanghai and London. Described as ‘truly international’, the company’s 750 lawyers represent what has become one of the world’s largest law firms, catering for every linguistic and legal tradition.

The business itself is without a dominant culture or language. It doesn’t even have a head office, and herein lies its unique advantage, particularly in the current Tax environment. Management is drawn from the global network of offices where the group managing partner is Polish, the COO is British and the CFO is French. This irony is not by mistake, but by design. 

Global network
A growing amount of work is referred across the offices. Business exported in this way amounted to $65m last year, with originating partners passing work onto fellow colleagues in neighbouring parts of the world. Revenue increased by 37 percent to $282m in 2007, partly thanks to new offices in Berlin and Budapest.

A mixture of transactional services in corporate and real estate complimented the Contentious (litigation/arbitration) and Restructuring (insolvency/bankruptcy/work-outs) Practices – but it is the tax advisory market that is leading much of the growth. “This gives us cyclical protection,” explains Ms Furga. “We have been particularly pleased that despite the worsening global, liquidity crisis work volumes have remained high as 2008 has progressed. 

“Despite the credit crunch we set ourselves a very demanding 2008 budget and are currently running 15 percent ahead of last year, which we are very proud of in the current environment. 

“We are, however, by no means complacent and are monitoring the continuing and deteriorating global economic situation carefully.

“We are clearly seeing one of the most significant global shocks to the financial system since the inter-war years.

“This is an enormous challenge and will require short∞term government intervention. Unlike in the 1930s, governments appear well aware of the measures that are needed to be taken to restore confidence and liquidity.”

Tax-efficient structures
Ms Furga and her team spend much of her time assisting in the implementation of tax-efficient structures for business activities in Poland and abroad, and they understand the unique opportunities that are emerging in her specialist field.

Poland’s Minister of Economy, Waldemar Pawlak, stated last spring that by 2009 he would craft the easiest country in Europe to run a business with new laws and regulations. He is not alone. Potentially significant changes are being proposed to the tax regimes in Holland, India, UK and Spain to list but a few.

Other countries moved some time ago to take the early initiative. The introduction of a participation exemption in Russia allowed Salans to develop a tax planning product aimed at tax-free repatriation of profits, previously unachievable. The scope for further opportunities in 2009 is significant, according to Ms Furga.

“Our approach goes beyond the immediate issues to proactively
seeking solutions to client needs,” she says. Our UK tax practice is currently looking very closely at the possible change of the holding companies’ tax regime in the UK, which could provide our clients with new fascinating opportunities. 

“Luxembourg tax reform is also a very positive development.” But are governments doing enough to steer their economies away from recession by simply assisting businesses with tax breaks?

Transparency and exchange
The Organisation for Economic Cooperation and Development is encouraging more countries to make significant moves toward full implementation of its standards concerning transparency and effective exchange of information in tax matters.

These changes are perhaps more important than planned tax incentives, which could soon litter the landscape like bags of wet peat on a scorched desert plain, because without transparency and exchange there is only suspicion, fear and weakness. Ms Furga believes liberalisation of the markets has had a largely positive effect on economic development, but she too backs more openness.

“Open and better-integrated financial markets have benefited individuals and companies by lowering the cost of capital and encouraging greater competition in the provision of financial services,” she says. “Open and efficient markets depend, ultimately however, on international co∞operation and respect for international standards. 

“Advances are being achieved in bringing greater transparency to financial centres around the world and we welcome this development. However, we think that more substantive progress needs to be made in initiatives to improve exchange of information provisions.”

The UK government is among those leading the field in a comprehensive root and branch review of the UK tax system, but lack of clarity over the process continues to hamper the process.

UK tax review
The review is focused on the UK tax treatment of foreign dividends, the scope of the UK’s controlled foreign company regime in taxing the profits of overseas subsidiaries of UK companies and the tax deductibility of interest expense.

The details of the proposed changes have been released on a piecemeal basis, creating much uncertainty and apprehension.

Ms Furga adds: “Our UK tax practice anticipates that in 2009 the UK government will formally announce the conclusion of its review and will provide complete and comprehensive details of the new fiscal regime that it is intending to introduce.

“If the UK government seizes the opportunity to introduce in to the UK tax system some of the ideas that it has been discussing informally with various interested bodies then this will represent a fundamental change in the UK tax system.

“This will result in the UK becoming a very attractive environment for the location of international business and holding companies. Top of our wish∞list for 2009 would be a desire that the UK government addresses the uncertainty that presently surrounds this issue.”

In an increasingly competitive and changing international market, Mr Brown’s rescue package could be a distant memory by Christmas. The use of fiscal policy by governmental authorities will continue to attract interest into the New Year and beyond.

The UK government, in May 2008, voted to keep the limit on abortions at 24 weeks during an early reading of the Human Fertilisation and Embryology (HFE) Bill. The bill was positioned such that at the final reading abortion laws could be liberalised in the UK for the first time in 40 years. MPs were expected to vote on proposals to make it easier for women to terminate pregnancies. Said Dr. Evan Davis MP: “I am as confident that we would win any votes on these as I was that we would retain the 24-week upper time limit.”

Instead, on October 22th, the vote was blocked by a “procedural motion” tabled by Alan Johnson, the Health Secretary, which effectively denied MPs time to discuss abortion. Abortion legislation in the UK is informed by ethical and moral positions as well as scientific evidence. The committee that presented to both Houses did so, not to suggest how they should vote (“science can tell us only one of many factors that are taken into account when legislating on the issue”), but to comprehensively inform: “scientific developments can alter the balance of opinoin on ethical and moral issues.” The debate must now find a new platform in parliament. Phil Willis, chairman of the committee, discusses some of the proposals of the failed vote.
 
Nick Laurance: The ‘threshold of viability’ has been widely interpreted. Particularly problematic is the definition of viability itself and at what age a foetus can be assuredly ‘viable’. What developments have there been since 1990?

Phil Willis: When my committee examined the issue of late termination it looked at the question of viability as a determining factor as had been the case in 1967 and 1990. We found that although there were a small number of babies born at 22 or 23 weeks there was little difference in survival rates between 1990 and 2008. What has changed is the ability of medical science to keep alive the small number of surviving babies, but such intervention has not prevented the very significant incidence of disability as the child grows or of premature deaths.

NL: The report cites three ways in which it is possible to infer if a foetus feels trauma. You distinguish between conscious and subconscious pain. How important is this distinction?

PW: The fundamental issue concerning sentience remains an issue of significant scientific debate. However, the bulk of scientific opinion, including that of the Royal Society of Obstetricians and Gynaecologists, is that the ability of the foetus to feel conscious pain arrives well after the 24th week. It is, though, important to stress that without invasive experiments to actually inflict trauma on a foetus it is impossible to prove conclusively exactly when the brain cortex is connected to the rest of the nervous system whereby we can be sure about the sensation of pain. What is without doubt is that the ability of the foetus to react to various physical stimuli in the womb is well known.

NL: There seems to be some ambiguity in what constitutes ‘foetal abnormality.’ Inconsistency in some cases has encouraged controversy. Should the law better define what we mean by ‘handicapped’ or ‘abnormal’?

PW: The joint committee of both houses of Parliament which looked at the draft bill in June 2007 recognised this as an issue and recommended that the Royal Society of Obstetricians and Gynaecologists should provide a clearer definition about foetal abnormality. However both committees, which included eminent lawyers and scientists such as Lord Mackay of Clashfern and Lord Winson, respectfully, agreed that a tight definition was virtually impossible but what we should encourage was that clinicians take great care before advising on what was a foetal abnormality, particularly if it concerned termination.

NL: The majority of abortions are approved for a social reason or a psychiatric reason, not a medical one. You dispute the need for two doctor’s signatures in the first trimester. Does the two signature requirement not preserve, somewhat, against the lack of psychiatric expertise among many doctors?

PW: Whether abortion is right and under what circumstances is a matter of law as defined in statute. The committee could find no compelling evidence that value was added to the process by requiring two doctors’ signatures; indeed this is the only medical procedure that requires such a condition. We were concerned that the second signature, often received via fax without the woman being present seemed to confirm that this was a bureaucratic rather than a health condition. What the committee did not recommend was that there should be any loosening of the rigour with which a doctor supported a termination nor did we rule out the need for a second opinion where this was thought appropriate.

NL:  “Subject to usual training and professional standards [we conclude] nurses could be permitted to carry out early surgical abortions”.  How will patient safety and quality of care remain?

PW: The reality is that “appropriately qualified” and “appropriately trained” nurses carry out a significant number of clinical procedures now including some invasive procedures. For the first trimester terminations using misoprostol involve taking medication and it seemed to us perfectly logical to allow nurses to carry out this procedure once a doctor had agreed that the procedure should take place.

NL: How did the pro life lobby react to the report?

PW: Inevitably when a report does not meet the aspirations of a lobby group it is not surprising that a negative response is forthcoming. I was, however, deeply impressed with the very sincerely articulated views of many pro-life organisations particularly the demand for higher quality counselling of women. I agree totally with their view that every child should be a wanted child and to that objective we should all strive.