Every day we strive to understand our clients’ objectives and develop solutions which innovate and impress. Here you’ll find a selection of case studies illustrating how our creative approach has helped secure better outcomes.
Freeing up our client to focus on strategy
In 2012 Pinsent Masons launched a new, progressive way of working which fundamentally recalibrated the traditional ‘client/ adviser’ relationship with one of its major clients, a significant global financial institution.
At the heart of the arrangement was a programme to effectively outsource a significant proportion of its operational legal work for a fixed fee – in turn freeing up the legal team to focus on delivering a more strategic, value-adding service to the business.
Following the global financial crisis, the legal function at the client organisation recognised that without re-thinking its approach to delivering legal services to the business, it would be overwhelmed by high volume of operational work without truly delivering the strategic value which is expected of a modern, commercial legal function.
Specifically and by way of example, like many financial institutions in the wake of the crisis, our client was subject to a significant volume of legal complaints, queries and legal challenges requiring careful handling.
In addition to the volume of such matters, the position was made more complex by the fact that there was a huge spectrum of complexity and risk within the bulk. Some issues could be quickly and easily processed, others – without expert handling – could escalate and create a significant financial exposure, particularly when aggregated.
In the past a typical solution to such a problem might simply have been to instruct a private practice to process these matters, or to create a large in house team to service the work.
However, it was clear that neither of those models would be efficient or cost-effective, and wanted a more creative, modern approach.
Working with Pinsent Masons, with whom the client had an existing relationship dating back a number of years, the two organisations worked together to develop a new approach to collaboration that would allow the client to focus on what really matters to the business.
The principal components of the programme were:
- Fixed fees and long term certainty – the client knew exactly what its legal spend was going to be for specific work types
- Comfort that the service would be cost-effective because Pinsent Masons was sharing the risk – ‘bonus’ payments were effectively awarded for efficiency
- A transparent service: there were clear processes and reporting via the bespoke matter management system developed by Pinsent Masons. Each matter was categorised into gold, silver or bronze (based on a range of factors such as potential cost and legal complexity) and followed a relevant track. At all times Pinsent Masons could provide the client with management information such as number and type of matter, cost, time spent and other key indicators
- Together with the client, Pinsent Masons was able to accurately measure benefits and provide management information to detect trends and pre-empt legal risk
- Pinsent Masons invested in a bespoke matter management system for the client, incorporating built-in knowhow around the client’s preferred approach to specific matters. This, plus significant investment into resources and training, mean that the client received a consistent and seamless service across the various Pinsent Masons offices which serviced the arrangement
- The client was able to access specialist legal resource recognised as at the cutting edge of legal developments in the financial services arena, in addition to more junior resource and LPO providers through one partner – ensuring work was overseen and conducted at a level appropriate to the level of risk.
This new way of working was distinctive in that it fundamentally re-calibrated the relationship away from hourly rates whilst still providing the flexibility for creative legal thinking which can be inhibited by a strict fixed fee model.
We believe this is a first in this segment of the financial services sector and remains highly unusual owing to the unwillingness of private practice firms to engage with significant contingent risk.
The programme, which began in 2012, has been a major success. Costs savings of at least £1m to the client have been generated year-on-year as a result of the initiative.
More importantly, however, the programme has served the primary purpose of freeing up the legal function to take a more strategic role, advising on issues such as new product development which really add value to the bottom line.
Building Smarter Cities
In 2008, Peterborough City Council (PCC) adopted an ambitious target to make Peterborough the UK’s Environment Capital. It was a bold aim, and the council recognised that to achieve this it would need to do things differently – and use advisers for whom innovation is second nature. Enter Pinsent Masons.
Working with the council, and combining its experience of working with public sector bodies with extensive knowledge and contacts within the energy sector worldwide, the firm has helped the Council work with private sector backers to develop and deliver a comprehensive package of changes benefiting both the citizens of Peterborough, and the environment.
Breaking new ground
No part of this project has ever been done in the public sector before. The scale and scope of the change programme has been unprecedented.
To date the programme has comprised the following five core components:
At the heart of the programme was a first-of-its-kind collective switching scheme aimed at leveraging the purchasing power of local authorities to get a better deal for constituents. The scheme, ‘Ready to Switch’, allowed residents and SMEs from across the city to join together collectively as a single unit to negotiate cheaper energy bills.
Participants were invited to visit a purpose-built website to register their details free of charge, giving their current energy usage figures for gas and electricity. Energy suppliers were then offered the opportunity to participate in a reverse auction. The supplier with the lowest tariff was the successful bidder.
The scheme has attracted over 50,000 participants (and anticipated savings of over a £1m) – making it the largest of its kind in the UK.
Crucially, Pinsent Masons designed a legal framework that allowed other local authorities to join and promote the scheme – and in so doing leverage greater collective bargaining power. Eleven did so. This was ground-breaking and demonstrated the power of local authorities working together to deliver a national strategy to deliver energy savings and alleviate fuel poverty.
“I welcome this initiative by Peterborough and its partner Local Authorities [and] encourage councils across the country to follow their lead”.
– Secretary of State for Energy and Climate Change Edward Davey (speaking at the launch)
Retrofitting public buildings
Many public sector buildings are energy inefficient and waste significant amounts of heat and power. Pinsent Masons has developed the UK pathfinder project for allowing third party investment to buildings operated by public sector in association with the Green Investment Bank.
The project, which was developed through Energy Performance Contracting (EnPC), was structured to allow the retrofit to be funded entirely by private sector investors. The investors receive repayment of the capital cost through the guaranteed savings in energy bills (provided by the installer) as a result of fitting the measures. This innovate structure is the first of its kind in the UK and, again, can be adopted by other local authorities.
The scheme will take Peterborough and seven other authorities who have adopted it out of the carbon reduction commitments in two years.
“It’s great to see councils, such as Peterborough, taking action to cut energy use and upgrade inefficient buildings. Not only will this help cut the city’s carbon emissions, it will also help the council save money on energy bills and drive forward green growth in the local area…I wish Peterborough City Council every success with their innovative project.”
– Greg Barker MP, Minister for Department of Energy and Climate Change commented on the scheme
Strategic partnership with British Gas
Pinsent Masons helped to not just negotiate, but broker a deal between PCC and British Gas that will see the latter roll out subsidised energy efficiency measures to thousands of homes, creating hundreds of new jobs in the process. The strategic partnership will ultimately see British Gas plough some £20m, funded through the Energy Company Obligation scheme
(which places a legal requirement on energy suppliers to fund improvements in energy efficiency to alleviate fuel poverty). The scheme will ultimately allow some 7000 homes to be improved, and in so doing create 600 local jobs for young people who are unemployed or in education or training.
‘Grow your own’ energy
Last year PCC completed on a £200m Residual Waste Energy-from-Waste Project with Viridor, one of the UK’s leading recycling, renewable energy and waste management companies. Under the deal Viridor will develop a facility with the capacity to process up to 85,000 tonnes of residual waste per annum, diverting waste from landfill and generating net electrical power of 7.25MW per year.
Pinsent Masons incorporated into the contract structure a unique provision for PCC to purchase the electricity heat created from the plant. This was the first time ever a deal of this nature had been struck. When the plant is commissioned it shall allow PCC to obtain all its energy requirements for municipal and civic buildings – including 180 schools – from a renewable and carbon neutral source.
The Council has also established its own energy supply business now with OVO Energy meaning it can supply electricity which Council Tax payers have paid for back to the community. Given the Council owns the generating facility it can freeze prices in the long term helping the vulnerable and fuel poor. This is one of the first of its kind schemes in the UK and is helping break down the monopoly on energy supply of the ‘Big 6’.
A ground breaking Chinese partnership
In the coup de grace, Pinsent Masons this year helped broker a strategic partnership between PCC and AVIC, a Chinese state-owned company with significant experience and expertise in renewable energy and energy efficiency.
The agreement is expected to deliver new jobs and training, support for the development of an enhanced university/ higher education offering, and the development of a final fabrication facility for smart meters, solar panels and street lighting in Peterborough. AVID will in turn explore potential commercial opportunities linked to the installation of solar PV canopies in Peterborough’s car parks, LED street lighting, municipal Wi-Fi, and the development of an integrated transport platform bringing together CCTV, live passenger and other data to create a smarter transit system.
The Pinsent Masons approach to helping Peterborough deliver on its ambitious strategy was built around genuine insight into government policy, budgetary pressure and commercial drivers for energy sector players.
Pinsent Masons recognised that PCC could not deliver on its ambitious plans without private sector knowhow and resources. Pinsent Masons worked with the client to understand what would be acceptable from a legal and political perspective. It then married this to a detailed knowledge of policies and vehicles coming from central government – such as the Green Deal and Energy Company Obligation – and the commercial drivers of organisation such as British Gas and the Green Investment Bank. In so doing Pinsent Masons was able to deliver legal and commercial insight, plus the contacts to bring its strategy to life.
It is not overstating matters to say that the changes already delivered as part of this programme have save millions of pounds for the citizens of Peterborough, and will continue to do so as the investments mature. To take one example, ‘Ready to Switch’ has attracted in excess of 50,000 members with some participants reporting annual savings of up to £400.
What we have done is generate the Council £5.2m per annum – which means that cuts in Council spending are mitigated and the impact on front line services much-reduced.
At a time when the development of ‘Smart Cities’ – environmentally friendly, technologically integrated municipalities – is a priority in and around government, Pinsent Masons has also developed a framework which is flexible enough to allow other governmental authorities to join the schemes and reap the same benefits for their citizens. Over 750,000 individuals and 10,000 businesses have been able to get a better deal on their energy bills as a result of schemes developed by Pinsent Masons around the UK. The completion of the ECO deal with British Gas – which was a success in itself – is now understood to be under examination by councils in Bristol, Birmingham and Northamptonshire keen to emulate the success of Peterborough scheme.
This is perhaps where the most significant innovation lies: Pinsent Masons has broken new ground in developing flexible, scale-able structures and the strategies to help cities throughout the UK improve lives while delivering positive environmental change.
“The establishment of the UK’s first inter-council collective switching framework was down in no small part to Pinsent Masons’ excellent team and will save local households hundreds of pounds on their soaring energy bills.
– John Harrison, Executive Director of Strategic Resources for Peterborough City Council
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Re-imagining deal delivery in the financial services sector
The global financial crisis that began in 2008 changed the landscape of financial services forever. Restructuring and deleveraging became the order of the day, resulting in the sale of large portfolios of loans to some of the world’s largest equity and hedge funds, and investment banks.
Working with one opportunity fund, international law firm revolutionised how bids for those assets are transacted in a series of multibillion dollar deals.
Deals on this scale are traditionally highly resource intensive, particularly in terms of conducting due diligence on the thousands of underlying assets covered within the loan book. In each case the purchaser needs to understand the risk attached to the asset, but has an extremely strict timetable in which to complete the due diligence process (typically around 4-6 weeks) and submit a bid.
Due diligence of loan assets is typically outsourced to a law firm which, in turn, throws huge teams of lawyers at the project to get the work completed within the timeframe, manually. The result? Lengthy, inconsistently compiled due diligence at significant cost to the client – often lacking any real or useful analysis of risk, let alone commercial insight.
Pinsent Masons took a different approach. The firm developed a solution which incorporated elements of automation and disaggregation into the process and tailored it to the needs of the client.
We believed there was a better way to deliver due diligence – one that fundamentally moved away from the traditional ‘throw bodies at it’ approach.
The Pinsent Masons team sat down with the client at the outset of the transaction to understand what risks it truly cared about. This meant taking the time to understand the underlying business plan for the assets.
The Pinsent Masons team was then able to take this insight and engineer an online questionnaire completed via a cloud-based portal that would enable a consistent assessment of risk – and red flag matters of material concern to the client. A team of lawyers around the firm’s 2500-strong network were then set to work on reviewing loan documentation in order to complete the questionnaire.
To give a sense of the scale of the exercise, this process involved a review of over 3000 documents between 26 December and 9 January (or just two weeks, amid peak vacation season for most law firms).
That assessment would be pointless if it was not accessible. In a transaction of this scale, a due diligence report of hundreds (sometimes thousands) of pages – generally comprising extracts from the underlying documentation – is typically provided to the client with an exhortation to review it.
We took a different approach. Pinsent Masons delivered a series of concise (sub-20 page) thematic ‘Significant Risk’ reports. This red-flagged areas of material risk and was produced in a way that it could be easily digested. The client got concise and usable data about only the risks it truly cared about
Following the successful bid relevant information could also be shared with the client’s funders.
Further, Pinsent Masons worked with LPO provider Exigent to develop a coordinated management process which ensured that the legal and beneficial title from all of the underlying assets in the loan book – across some 20 legal jurisdictions – were properly transferred.
This was a major project management exercise which culminated in a week-long closing process including thousands of documents. Taken together, the bid process and subsequent completion represented cutting-edge and supremely efficient project management.
Client benefit and market impact
The impact of this approach to due diligence cannot be underestimated.
First and foremost, its legal team was able to spend less time wading through due diligence and considering spurious legal risk, and more time focusing on issues that speak to pricing in the transaction.
Second, all of the data collated during the due diligence process which is relevant to the successful execution of the business plan now sits on a client extranet – meaning asset managers, lawyers and other professional advisers have on-going access to a bank of information for better management of the investment.
Third, the client got all this for significantly less than it might normally have expected. For transactions of this scale typically Magic Circle firms are instructed with commensurate rates. Through a mixture of automation and near-shoring, Pinsent Masons was able to save the client money and provide a better, more relevant end product.
Killing the billable hour
In 2013 Pinsent Masons was appointed sole adviser to global infrastructure giant Balfour Beatty for a broad range of legal services.
At a stroke, the appointment gave the FTSE-listed business complete certainty over its legal spend for a number of years, in addition to access to detailed management information to help assess business performance and drive continuous improvement.
Further, while Pinsent Masons has always advised on elements of complex and critical work, the deal is structured in a way that benefits Balfour Beatty the more often that happens.
This landmark deal fundamentally recalibrated the client/ private practice relationship away from the billable hour – and there is evidence that this model is catching on.
This matter captures the essence of the ‘more for less’ agenda among purchasers of legal services and how a factor perceived as a threat by some firms can be turned into opportunity.
Following an extensive investigation into the legal services provided to Balfour Beatty across the world during 2012, the infrastructure giant decided that an innovative approach was required and asked several firms to respond to an RFP which proposed a new way of working in the UK. The goal was to take significant cost out of the system while retaining the appropriate level of legal quality.
Under the new arrangement external spend was to be split into two categories: ‘everyday’ legal work, which is not necessarily value-adding to the strategy of the business but needs to be done well and as efficiently as possible to prevent escalation; and more complex, value adding work, which is inherently more difficult to predict and to price.
The RFP also set out that Balfour Beatty was targeting significant savings in its UK ‘everyday’ legal spend which would be achieved by consolidation of spend, economies of scale and continuous improvement.
At its most simple level, Pinsent Masons responded with a blend of technological innovation and imaginative pricing which fundamentally shifted arrangements away from the hourly rate and incentivised efficiency.
Pinsent Masons’ proposal was based not around hourly rates but simply the ‘number of matters’. This gives Balfour Beatty the required level of certainty over its legal spend for BAU work for a number of years. Significantly, it also places the emphasis on the external advisers to conduct work efficiently and maintain acceptable levels of profitability.
This required a significant amount of innovation and Pinsent Masons has developed a suite of technology-driven solutions – such as bespoke case management and matter opening systems – to achieve that aim. No instructions can be made or accepted without passing through an online instruction portal, which in turn gives senior management total visibility and transparency over the matters being instructed and subsequent workflow.
The technological infrastructure means that detailed management information can and is fed back into the business, detailing the types of work instructed, the level and type of demand from different business divisions and corporate entities, geographical breakdown of work and so forth. In this way, strategic issues can be indentified, resolved and in some cases pre-empted in a way not seen before.
Innovation in client service
The account is structured in such a way that a formal Steering Committee (with three representatives on each side) meets on a monthly basis to look at how the account is operating. It also analyses the comprehensive management information available as a result of the ‘helicopter view’ afforded by the use of a sole adviser, and address any issues, share strategic insights and drive continuous improvement.
Additionally, six-monthly relationship reviews are conducted which incorporate surveys of users of legal services. During the last such review, 90% of respondents using Pinsent Masons services reported being satisfied or very satisfied with key performance indicators such as matter set-up, the relationship with Pinsent Masons’ lawyers and the services offered by the firm.
Innovation in pricing
There are two primary innovations linked to this deal. The first is the scale and scope of the fixed fee arrangement which, we believe, is unlike any in the market.
Second, Balfour Beatty is incentivised to use Pinsent Masons on a higher proportion of complex and critical work – and in so-doing adding value to the overall relationship.
There can be no doubt that the arrangement is proving to be a major success for both parties with several thousand matters being instructed. The goal was to take significant cost out of the system while retaining the appropriate level of legal quality. We are on course for achieving greater savings that those originally targeted, and satisfaction levels within the Balfour Beatty business are consistently good.
Across the legal market as a whole, the deal has had a significant impact. Pinsent Masons has been appointed as sole adviser to E. ON UK Plc on the vast majority of its legal work, while several other clients have expressed concrete interest in exploring a sole adviser model.
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Driving continuous improvement to reduce legal spend
With over 170,000 employees and over 500 places of business, a major Pinsent Masons client is probably among the most complex of businesses in the country from an employee relations perspective.
Inevitably given the size of the workforce and a significant commitment to fair and equitable treatment of staff, employee relations issues can arise. These issues – particularly if escalated to Employment Tribunal level – can be time consuming, costly and cause significant brand damage.
Our client was keen to find a new way of working with its employment lawyers to foster continuous improvement, drive up standards further still and address issues early through targeted pre-emptive measures.
In 2013 Pinsent Masons was instructed on a fixed-fee, sole adviser basis for all its standard employee dispute work.
The programme gave the client complete certainty over its legal spend for this type of work over a period of three years.
Further, it incentivised external advisers to achieve maximum efficiency by putting no cap on the number of claims handled. It also encouraged continuous improvement by reducing the overall annual fee by 15% in year two and again in year three.
Pinsent Masons, in turn, benefited from complete certainty about its income stream, and a real opportunity to influence the amount of work generated. It was also given considerable freedom over the way the work was to be carried out.
Pinsent Masons developed a unique, proprietary case management system (CMS) for the handling of employee disputes.
This innovative CMS, which was configured to the specific needs of the client, delivers the following benefits:
- a quality-assured, consistent service;
- real-time management information;
- a focus on trends and risk areas so that these can be addressed, reducing claims and resolution costs.
Matters are progressed through a pre-defined workflow or series of steps, automatically prompting the legal team to complete necessary actions in line with critical dates and criteria, giving complete transparency over the status of matters from instruction to completion. The system is fully tailored to the bespoke protocol agreed with the client, ensuring that they receive what they want, when they want and in the form they require.
This system eliminates waste by ensuring that no time is spent ‘re-inventing the wheel’ on case management, chasing down or searching for documents, or providing updates to the client on individual cases (as the legal team can access the information themselves at will). Qualified lawyers are used only where necessary. Complex cases can be identified and escalated quickly. It also facilitates central supervision of a UK-wide team covering claims in England, Wales, Scotland and Northern Ireland – effectively leveraging Pinsent Masons flexible costs base and ensuring that experts in the variations of each legal jurisdiction are involved where appropriate.
Further, the system supplies meaningful management information to the HR and legal functions in the format they have specified, which gives rise to a programme of continuous improvement and training running through the client business.
Using big data to generate big insight
By using the case management system to handle all of these matters, Pinsent Masons can collate meaningful management information relating to all claims handled. This currently includes a quarterly ‘dashboard’ outlining the number and type of claims in progress, the form of resolution for completed claims (e.g. struck out, settled, won, lost) the average size of award or settlement , the types of claims that have been raised and the areas of the business from which they are arising. Those quarterly reports also include a ‘bite-sized’ update for the client, with key learning points taken from the previous quarter’s disputes and a note of key changes to employment law which might affect claims in the future.
Strategic reviews are then conducted to identify common trends and where pre-emptive steps could be taken, for instance through the provision of training on particular issues or to particular parts of the business.
This is where Pinsent Masons ‘Employment Law+’ service comes in, providing tailored training solutions to upskill people managers.
The ‘Employment Law+’ team has trained in excess of 1,000 people managers from across the client’s business on best practice in relation to employment law, with content tailored to the needs of the business as identified by trends in the data compiled through the case management system.
During 2013 the team prepared and delivered a series of tailored training courses for a targeted group of senior people managers on business critical projects. The sessions were designed to enable easy cascading of information throughout the business with learning materials developed such that delegates were empowered to deliver courses to their own staff.
By investing in its decision makers in this way our client benefitted from improved awareness and management of the risks inherent in day to day management, and increased managers’ confidence to deal effectively with colleagues at work.
A significant reduction in the number of claims passing through the system has been recorded relative to previous years.
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Using big data in big litigation
In 2013 Pinsent Masons’ IP team won the landmark ‘first-of-type’ Google AdWords litigation for Interflora against Marks & Spencer.
The result prevents M&S from using the Google AdWords programme – keyword advertising – to promote its flower delivery service by reference to the trade mark ‘Interflora’.
The case highlights Pinsent Masons’ ability to lead at the cutting edge of the law, and the result was internationally anticipated and has implications on keyword advertising across the globe.
As a result of the judgment, distinctive international brands have a precedent that suggests no one should bid on their brand via keyword advertising.
As well as being a ‘first of type’ keyword advertising judgment, the case broke new ground regarding the evidence required to show consumer confusion, with Pinsent Masons devising a strategy utilising Google Analytics and other online metrics rather than traditional survey evidence.
Background to the case
Enter a search term on Google and the search results page instantly delivers relevant listings both as adverts and ‘natural’ results. Competitors pay Google to sponsor ‘keywords’ so that their adverts appear at the top of the search results page in the ‘golden box’. Keyword advertising is worth around £3bn a year in the UK alone most of which is spent on Google’s AdWords programme.
In May 2008 Google changed its trade mark policy which for the first time allowed companies to “bid” on competitors’ trade marks in the Google AdWords advertising programme.
This meant that Marks & Spencer (and other companies) could use the Interflora trade mark as an AdWord to advertise its flower delivery service so that when a customer used Google to search for flowers with the term “Interflora”, adverts for Marks & Spencer appeared in the golden box, alongside adverts for florists in Interflora’s flower delivery network. Prior to the change in policy, the Google search results page showed only results for Interflora.
This had two major financial implications for Interflora. First, Interflora’s advertising costs went up over 3000%. Second, Interflora lost business to Marks & Spencer and other competitors as the conversion rate of customers from ‘search to purchase’ dropped dramatically as a result of competitor keyword bidding.
Pinsent Masons proactively identified and approached organisations likely to be affected. Interflora was one of the companies identified and needed to move quickly to protect its market share. It instructed the firm to pursue an action against all those competitors bidding on the Interflora trade mark.
Pinsent Masons cleared the “Google bidding landscape” until only two companies remained, Marks & Spencer and Flowers Direct, against whom proceedings were issued in December 2008.
A dynamic landscape
The landmark judgment followed a five year battle involving a reference to the Court of Justice of the European Union (“CJEU”) and two trips to the Court of Appeal all before the trial of the action.
The injunction not only prevented M&S from actively using the Interflora trade mark, but also forced M&S to “negative match” Interflora so as to exclude it from all AdWords campaigns relevant to flowers.
It was an extremely high profile case and achieved widespread coverage in the national, legal and trade press. Securing a successful outcome was far from straightforward.
When Interflora launched proceedings against M&S, Pinsent Masons deliberately limited the case to only two types of trade mark infringement – the so called “double identity” (same mark, same goods) and “free-riding” (taking unfair advantage of the Interflora trade mark) – to avoid the need for consumer survey evidence.
However, in concurrent actions taken against Google in France, the CJEU made new law and ruled that even when an identical mark is used for identical goods, the test for infringement requires the national court to determine that the competitor’s sponsored link does not allow a “reasonably well-informed and reasonably observant internet user” to tell if the advert for the goods is for those of the trade mark owner or those of the competitor. The CJEU reference in the Interflora case confirmed that this “average internet user” confusion test was applicable.
To find evidence to satisfy this, Pinsent Masons conducted two pilot surveys to gather witnesses to prove that there was confusion among ‘average internet users’. At first instance, Justice Arnold admitted the evidence from one of the pilot surveys. M&S appealed and in overturning the decision and refusing to allow the evidence, the Court of Appeal re wrote the law on the admissibility of survey evidence.
Given that the M&S appeal was not due to be heard until November and the trial was due to start in April 2013, in order to protect Interflora’s position Pinsent Masons undertook a second exercise to obtain evidence from average internet users. Again, Arnold J allowed the evidence and again, in April 2013, the Court of Appeal overturned him.
It was now less than two weeks before the start of the trial and Pinsent Masons had to proceed without the benefit of a survey to show the “confusion” evidence typically used in trade mark cases.
The team conducted a detailed analysis of the “Google Analytics” data and other online metrics which advertisers use to track the internet users’ journey from initial search to final purchase. This anonymised “big data” evidence showed that where a customer used Google to search for Interflora and visited M&S thinking it to be part of the Interflora network, the customer would “bounce” immediately back to the Google search results page, confused as to why he or she had not landed on the desired Interflora home page. By comparison the data showed that those customers that searched for Interflora on Google and then visited the official Interflora website, stayed on the Interflora website for a considerable length of time, often to complete a purchase.
Justice Arnold accepted that this evidence could only be explained on the basis that it showed that average internet users were confused by a Google search results page which included M&S when they had searched for Interflora.
It was the first time that a court had accepted this type of “big data” evidence as a proxy for actual evidence of customer confusion.
As mentioned above, the importance of this case was reflected in the long-running media coverage of the matter. The judgment was reported by national media including The Financial Times, The Times, The Guardian and key trade titles such as The Lawyer and World Intellectual Property.
Since the injunction was awarded against M&S the “Google Landscape” has remained clear of competitors bidding on the Interflora trade mark, meaning the ruling has had a huge deterrent effect. In financial terms this means that Interflora’s Google bid costs are at an historic low and its “search to purchase” conversion rates are back to pre-May 2008 levels.
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Breaking new ground in a game-changing technology dispute
In 2014 Pinsent Masons advised the Secretary of State for the Home Department on a successful application to the High Court to set aside a £200m+ arbitration award made by an international arbitral tribunal in August 2014.
The case was remarkable for two reasons. First, the litigation was one of the most high-profile and politically charged in the UK for some time.
Secondly, it broke new ground in clarifying the basis upon which the Courts of England & Wales can and will intervene in an arbitration process – a matter upon which there was previously very little case law.
The true legal innovation lay in identifying and successfully evidencing the basis for the High Court proceedings – a course of action that ultimately led to the Award being set aside and an order that the matter be re-determined by a new tribunal.
The origins of the challenge lie in an arbitration linked to the ‘e-Borders’ programme. US defence company Raytheon Systems Limited (“RSL”) was engaged by the Home Office in 2007 to design, develop and deliver the £750 million e-Borders technology system, in order to reform UK border controls by putting in place an electronic system to vet travelers leaving and entering the UK by checking their details against various watchlists. By 2010, key milestones had been missed and parts of the programme were running at least one year late, leading to its termination by the Home Office in July 2010.
RSL claimed that the termination was unlawful and that it was entitled to recover substantial damages for wrongful termination. A confidential arbitration process was then commenced by the Home Office in September 2010.
The full lifecycle of this dispute has involved innovation at every stage. The arbitration was one of the largest IT cases ever seen in international arbitration globally.
After a very lengthy hearing, the Arbitration Award was issued in August 2014 and held that the termination was unlawful. It directed the Home Office to pay substantial sums to RSL, comprising £49.98 million for damages; £9.6 million for disputed contract change notices; £126 million for assets acquired by the Home Office during the contract (the “Transferred Assets”) and substantial sums in respect of interest and RSL’s costs of the arbitration.
In most cases that would have been the end of the story. Speaking to The Times newspaper in August a partner from one Magic Circle firm said, said: “The home secretary’s suggestion that she might appeal the tribunal’s award looks very peculiar….Challenges to arbitration awards very rarely succeed.”
However, Pinsent Masons broke new legal ground in successfully bringing a challenge on behalf of its client.
The judiciary is generally reluctant to intervene in arbitration proceedings for fear of undermining one of the primary perceived benefits of the process – freedom from interference by ‘local’ courts.
For that reason, compelling, robust and technically astute arguments were required for the Home Office’s challenge to succeed. Indeed, it was noted in the judgment that there is no previous authority which substantially mirrors the facts of the current case.
Notwithstanding that, in September 2014 the Home Office challenged the Award in the High Court in London under s68(1) and s68(2)(d) of the Arbitration Act 1996, seeking to have the Award set aside and declared to be of no effect on grounds of “serious irregularity” affecting the tribunal or the award on the basis of a “failure by the tribunal to deal with all the issues that were put to it”.
The Pinsent Masons team broke new ground by developing arguments in a largely untested area of law.
They brought forward arguments that the tribunal had failed to deal with issues before it that were critical to the determination of the arbitration, and which affected both liability and quantum.
In two judgments dated 19 December 2014 and 17 February 2015, both made public on 17 February 2015, Mr Justice Akenhead, sitting in the Technology and Construction Court, upheld the challenge and determined that: first, the Award had been tainted by serious irregularity so as to cause substantial injustice within the meaning of the Arbitration Act; and secondly that the consequence was that the Award must be set aside in total and reheard by a new Tribunal.
The learned Judge found that the Tribunal’s failure to address the issues had caused substantial injustice. The Judge found that this arose, not only from the fact that the issues were not clearly dealt with, but also that both parties had spent a large amount of time and resources in presenting their cases on these points. Had the tribunal considered the issues there was a real likelihood that it would have had to reconsider some of its key findings, which may have led to a different outcome. The fact that the tribunal failed to address issues as to responsibility for incurred costs necessarily caused substantial injustice, given the large sum awarded (£126 million) in respect of the Transferred Assets.
Akenhead J found that the Award should be set aside in total and the matter determined by a new tribunal. The matter subsequently settled, securing a nine-figure saving for the government and in turn the taxpayer.
It is not overstating matters to say that the case also has significant ramifications for arbitration in the UK. It is now the leading case on a number of issues concerning the circumstances in which the English Court will exercise its discretion to intervene in arbitral awards where serious irregularity is alleged (noting that the Court’s starting point is that it will only intervene in extreme situations).
In short, it has broken the mold on successfully challenging arbitral awards in England & Wales. We wait to see the impact on the arbitration community and whether there will be a rise in the number of challenges against arbitral awards made in England and Wales.
Delivering critical infrastructure despite shifting sands
In 2013 Pinsent Masons advised on the first fully-fledged airport concession project to have achieved financial close in the EU since the financial crisis.
Our specialist infrastructure finance team advised the Zagreb Airport International Company (ZAIC) consortium on a £275m Zagreb Airport terminal deal. Once completed, the new terminal – scheduled to be delivered at the end of 2016 – will be capable of handling 5 million passengers annually compared to the current capacity of 2 million passengers.
This deal was also the first Public-Private Partnership (PPP) project in Croatia since the country became a member of the European Union in summer 2013.
This project mirrors the country’s ambitious vision to compete as a global player and is a milestone for transport links in and out of Croatia. It required an unusually flexible approach because of the different PPP laws which applied during the life of the procurement, and the entry into the EU by Croatia between commercial and financial close,.
Pinsent Masons was instructed by Bouygues Batiment International SA on this matter after the firm’s lead partner, Catherine Workman, impressed them whilst acting on the opposite side (for the government of Cyprus) in relation to a similar project for Larnaka and Pafos Airport PPP Project. Previously Bouygues Batiment had used Norton Rose for transactions of this type.
It required significant technical innovation. This PPP is a landmark for the Balkan area in terms of the size of the project and the rigorous tender process it followed, in line with EU standards.
Due to the procurement process there was a unique situation whereby the Sponsors signed a Concession Agreement in April 2012 which included a precedent condition to obtain financing. This required a juggling act between the requirements of a the Government in the signed Concession Agreement and the bankability requirements of the lenders which was managed by the Pinsent Masons team to the successful satisfaction of the Government, Sponsors and Lenders.
The changing legislation in Croatia (notably the different PPP laws which applied during the life of the procurement) and the entry in to the EU by Croatia between commercial and financial close provided a number of challenges to the Project which were overcome in a variety of ways – including through amendments to the Concession Agreement negotiated with the Government, which was led by the Pinsent Masons team.
The successful completion of this transaction required a master class in project management, which was led by Pinsent Masons due to its role acting for the lead sponsor.
Various parties were involved including: two sponsors in Turkey, two in France, one in Luxembourg, and one in Croatia; funders in London, Frankfurt and Vienna; the Croatian government, the IFC and the Marguerite fund (and EIB fund for development of infrastructure assets). Most of these had local and international advisers, meaning that around 18 sets of legal teams from private practice were involved together with active in house legal teams from Bouygues Batiment, Aeroports de Paris, the Marguerite fund, EIB and the IFC.
Pinsent Masons’ role was to corral the numerous advisers and also ensure that advice which was often highly academic in nature was assimilated into a digestible and commercial format for the lead sponsor.
Costs management was a significant challenge in this matter given the significant changes which affected the mandate along the way, ranging from turmoil on the financial markets to Croatia’s accession to the EU. Nothwithstanding that Pinsent Masons operated on a capped fee basis and was praised by the client for communicating pricing issues effectively with the client throughout the duration of the transaction.
In the pursuit of continuous improvement, Pinsent Masons uses an independent third party to conducts post transaction reviews with clients following the completion of major mandates. These test the client’s experience in several areas.
The client described themselves as “very satisfied” when asked whether Pinsent Masons:
- Took the time to understand the business objectives
- Gave the benefit of its experience on similar projects
- Set realistic expectations relating to outcomes and timetables
- Assigned an appropriate team
- Provided advice in understandable terms
- Responded quickly and effectively
- Delivered advice tailored to client requirements
- Corresponded clearly and accurately
- Met agreed timescales
- Had an appropriate level of partner involvement
- Demonstrated a strong understanding of the client and its culture
- Understood the client objectives
- Worked well with other advisers
- Offered commercial and strategic advice and effectively project managed
- Communicated effectively
- Demonstrated strong commerciality and strong technical expertise.
This was the first fully-fledged airport concession project to achieve financial close in the EU since the financial crisis. In a time of challenging financial markets, a robust and innovative project finance transaction was constructed in a way that proved acceptable to key stakeholders.
For further information please see our Infrastructure Sector pages on PinsentMasons.com or please contact:
De-risking tax litigation
The global financial crisis has served to accelerate a trend towards tax authorities becoming increasingly aggressive in their approach to collection. The squeeze on public finances has triggered a battle to ensure every business pay its “fair” share in taxes. Tax disputes involving household names like Amazon and Starbucks have become front page news – subjecting big business to reputational as well as legal risk, which combined can move share price significantly. In short, tax has become a boardroom issue.
However, issues have also arisen in relation to individuals. Accelarated Payment Notices (or APNs) were first introduced in the UK in 2014 and enable HMRC to demand upfront payment of any disputed tax , prior to any decision by a tax tribunal. Notices demand full payment within 90 calendar days with no right of appeal. Some commentators have described APNs as a “shoot first, ask questions later” approach to tax issues.
Recognising that many individuals who had entered into certain tax arrangements in good faith and would not have the resources to challenge the tax authorities on their own, Pinsent Masons brought an innovative collective action to challenge the legality of using APNS.
Pinsent Masons’ market-leading tax team brought a Judicial Review of HMRC’s use of ‘Accelerated Payment Notices’ by the tax authorities against members of Ingenious Media film partnerships.
Ingenious Media has previously denied HMRC allegations that it is involved in a series of schemes that were not legitimate businesses but a means of avoiding tax. Several high-profile individuals, including prominent film and sports stars, are reported to have become involved in such schemes in good faith – and subsequently been subject to notices demanding that millions of pounds be paid to HMRC before any court is able to decide if tax relief obtained was legitimate.
Members of the film partnership were issued with bills worth hundreds of millions of pounds prior to any full review of their case, and denied the right to appeal.
By bringing the claim on a collective basis, representing a number of individuals, Pinsent Masons was able to ensure that the downside financial risk typically associated with group litigation was severely limited. Any individual bringing a claim would have faced huge demands upon their resources both in terms of time and cost. This route has alleviated that pressure.
It is very rare for the courts to give permission for a judicial review. Research by Thomson Reuters legal shows that less one 1 in 10 applications for permission are successful. In this case, however, the court agreed that there were genuine concerns over whether APNs were actually lawful and granted permission to bring the Judicial Review.
For further information please contact: