The document summarizes a presentation on helping in-house legal departments move from being a cost center to a profit center. It discusses benchmarking legal spend, reducing external costs by managing law firm panels, working efficiently through project management, case studies on other companies' experiences, and developing income streams through recoveries and contract management. The overall goal discussed is how legal teams can achieve added value and become profitable.

1. In-house counsel update seminars
A mixture of topics to keep you
up-to-date
Chaired by Mark Davenport
Eversheds LLP
London, 17 April 2012

2. The in-house legal department
Can it move from being a cost centre to
an income generator?
Andy Moody
Eversheds LLP
17 April 2012

3. Eversheds LLP – Eversheds Consulting
• One of the largest full service law firms in the
world with over 4,326 people including more
than 560 partners and almost 2,500 legal
advisers
• 46 offices in major cities across Europe, the
Middle East, Africa and Asia
• Relationship lawyers – pioneers of partnering
in the legal market
• Providing control over costs - championing the
cause closest to clients‟ hearts. Practising
proactive legal and risk management:
prevention not cure

4. Eversheds LLP – Eversheds Consulting
• Eversheds Consulting – A team of lawyers,
certified project managers, auditors, IT and
marketing specialists which delivers tailor made
solutions to legal departments
• Drivers of change experience of outsourcing
and off-shoring

5. Cost centre to profit centre
Re-aligning your legal team to achieve success
• Today‟s environment for Legal Departments:
– Budgetary pressures
– Drive to achieve more for less
– Search for optimum effectiveness
– Focus on added value
– Outsourcing pressures
– Showing the value of internal teams
With the above in mind, this presentation can help move
your teams move from a cost centre to a profit centre

6. Cost centre to profit centre
Steps to success – giving you the tools
• Analyse the effectiveness of your
internal team
• Reducing external costs
• Working efficiently through project
management
• Developing cultural change
• Integration of legal and business units
• Identifying revenue streams
• Profitable legal department

7. Your legal team
Re-aligning to achieve success
• Review of internal department
• Process mapping
• Focused KPI‟s linked to objectives/strategy for the team
• Benchmarking
• Clear management information relating to financial
performance
• Monthly reporting on KPI, strategy
and legal spend

8. Our process

9. Legal Work – Cost/Risk/Quality Matrix
The starting point

10. Process analysis
RECOMMENDATIONS
A gatekeeping process is Improved
necessary to keep a check Inputs from
and balance on the inputs the business
from the business, which
drive the negotiation process.
No
Introducing this new step in
the process and ensuring its
implementation will drive Is info
efficiencies throughout the received accurate Gatekeeping
rest of the process by & complete?
reducing the level of rework
and administrative burden
placed on the negotiators by
inaccurate and incomplete Yes Accurate and full
information.
information
Negotiators Reduction of
receive full admin burden
accurate and rework
information

11. Process maps
Incomplete and
inaccurate information
received by legal team
Currently done by
negotiators. Transfer
responsibility to admin
team?
Delays in starting and
considerable rework required
No unique identifier
due to missing or incomplete
for cases transferred
documentation
between systems

12. Process maps
The team has
automated much of
this workflow to
produce TMA within
2 working days
Missing a step for
the allocation
process
Missing a
We recommend that „gatekeeping‟ step
this task is done by which checks
the admin team documentation is
correct

13. Benchmarking
CURRENT PROCESS
BL
70
ING
60 EC
II
50 EH
40 DOR
ESC
30 NR
TR
20
NI
10 PI
CL
0 BAU
Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm IR
Comparison of negotiation times between 2004 and 2006 Cumulative mean percent of agreements executed
Surveys. Median percent by time bucket* by given time buckets*
20 100100
20 18 100 90 92
17 86
76 78
80
15 2004 66 2004
10 10 10 10 10 60
2006 46 48 2006
10
7 40 33
5 5 5 26
5 3 17
2 20 10
0 0
< 30 30-60 60-90 90-180 6-9 9-12 > 1 year < 30 30-60 60-90 90-180 6-9 9-12 > 1 year
days days days days months months days days days days months months
*Source: International Swaps and Derivatives Association www.isda.org
(ISDA Master Agreement Negotiation Survey

14. The legal department – metrics
Steps to success
Business Budget
strategic
level
$ Exposure $ Legal spend vs budget

15. Offshoring/outsourcing
High High Onshore LPO Bristol Paralegal Support
Title Hourly Monthly FTE rate
price rate per annum
High Paralegal £20 £3,200 £35,000
complexity
Skill set requirements
Billing rates (£ per hour)
Offshore LPO Lawyer Support
Title Hourly Monthly FTE rate
Moderate price rate per annum
complexity
Junior Lawyer £16 £2,600 £31,000
(India)
Senior Lawyer £25 £4,000 £47,000
(India)
Junior Lawyer £19 £3,000 £36,000
Low (Philippines)
complexity
Senior Lawyer £29 £4,500 £55,000
(Philippines)
Low Low

16. Working efficiently
Project management of legal work
Service excellence means that for all client matters,
we must be able to say YES to all of the following:
• We scoped the matter fully; understood key issues;
agreed expected outcome with the client
• We agreed a written fee quote, including scope of work
and assumptions which must be reasonable
• We controlled costs, updated client as appropriate, agreed
revised scope of work and constantly revised fee quote
• Updated client as to progress
• Obtained feedback

17. Working efficiently – “DealTrack”
Project managing your success

18. Reducing external costs
Getting value from your external law firms
20** Panel reduction process 20**
New
Existing firms Implementation of [* *] Legal Model external
panel
Firm Firm H.O.
Communication to business Firm
Firm Firm
Create jurisdiction panel firms Firm
Firm Firm Implement instruction protocol to panel firms
Europe
Firm Firm Review historical work with non-panel firms
Firm
Introduce invoice validation management system
Firm Firm Firm
and global measuring against budget
Firm Firm Asia
Commence use of matter manager for new matters
Firm
Firm Firm New matters only to be instructed to panel firms
by legal team Firm
Firm Firm
Implement value added strategy N. America
Firm Firm General contractor model Firm
Firm Firm Firm

19. Case studies

20. Case study 1
The DuPont Legal Model
“is an integrated approach for managing change within the
law department and for continuously improving how legal
services are provided to DuPont businesses in terms of
quality, cost and efficiency”
Founded on strategic partnering
Requires ongoing re-engineering of work processes
Focus on the bottom line has led to cost effective and
client-centred legal services
350 to 40 law firms in US, UK, Canada and Mexico
Total savings exceed $75 million

21. Case study 2
To achieve significant cost reduction and improve
legal representation Tyco held a competitive tender
for its legal needs in EMEA
• Gap analysis of internal resources and external
needs
• Eversheds replaced 285 existing law firms in EMEA
and seconded lawyers to Tyco
• Legal costs reduced by 30% and Eversheds
reappointed after two years

22. Case study 3
Proving
value
Demonstrating value of legal team
with key metrics? Before
 No way of showing
• Case study: FTSE 100 Company team‟s value
 Under pressure
Online business survey with face-
from wider business
to-face interviews. Benchmarking
 How to adapt to
of legal team value to business needs of business?
units, as well as strategies for
legal/business protocols After
 Financial &
Customer
Result: Report suitable for sharing validation of team
with wider business showing legal performance
team value, and identifying areas  Identified
for improvement improvements for
next stage of
evolution

23. Case study 4
Managing
spend
In-source v outsource
• Case study: Fortune 500
Before
manufacturing multinational
 No processes
Eversheds Consulting was
 no decision
approached to analyse and assess criteria
existing legal management and  ad hoc
risk and compliance functions
over 39 jurisdictions After
 sophisticated
Result: Provision of detailed decision tree
breakdown of £6m legal spend,  risk/quality/capacity
enabling benchmarking of internal assessment applied to
v external legal spend and different work areas
in different ways –
convergence programme of legal
rigidly applied
panel

24. Case study 5
Reducing
spend
Managing internal teams
Before
• Case study: FTSE 50 financial services  No KPI‟s
Engaged on a legal spend and process  No MI
engineering project – the starting point  No regular
being the wholesale banking legal team. meetings
Eversheds Consulting were responsible  No clear
for delivering process improvements, strategy
optimal team structures, data integrity After
and quality checking, as well as  Focused KPI
team KPI‟s linked to
objectives/strategy
 1:1 and
Result: We achieved a 32% team meetings
reduction in the team caseload  Monthly reporting
as part of the project
 Clear strategy

25. The challenge of contract management
Getting the value from your contracts
• Maximise the value of your
in-house legal work
• Manage your suppliers
effectively
• Reduce your risks Contract
Management
• Reduce your costs and get Lifecycle
full value from your contracts
• Make your legal team
profitable – recoveries

26. The profitable legal department
Achieving the ultimate goal
• How to create a revenue stream
• Identification of legitimate claims that
otherwise might be missed
• Money on the table which is not picked up
• Proactive management of transactions, agreements,
patents and other contracts to discover
wrongdoings.
Eg warranties and indemnities in M&A
• Not a Litigation Programme
• But needs a cultural change –
proactive not reactive

27. Case study 6
A legal recovery is defined as:
“any recoupment in the form of cash (royalty payments,
settlements and adjustments), products, services or other
quantifiable rights obtained for a company or its affiliates,
through the intervention by legal professionals beyond a
normal business transaction”
DuPont have recovered $1.6 billion since it started its
programme 5 years ago

28. • Not simply obtaining a favourable
settlement
• Capturing value in contracts
• 35% outside US
DuPont 2009 recoveries by cases
 Commercial/Contracts $248.9 million
 Intellectual Property $60.4 million
 Bankruptcy/Collection, Commercial/Sourcing $16.9 million
 Trade/Customs $7 million General Torts, Antitrust, Pioneer
 Trade/Antidumping $941 million Solae $659 million
 <1%: Insurance $492 million; Tax $240 million; Environment
$114 million; Corp. Securities $77 million

29. Action
• Evaluate litigation history and define profit and loss
• Implement structured programme between legal,
finance and business units
• Educate and inform on the possibilities, eg:
– Supply contracts
– Over-billing
– Power cuts
– IP/Licensing fees
• Establish a programme to assert legal rights
• Change the culture
• Communicate success

30. Developed to meet challenges faced by in-house teams
International
records
management
Legal spend Risk
and legal and
management compliance
Environment, Global
health and
Eversheds corporate
safety Consulting secretarial
Helping your
department to Recoveries
generate income

31. Corporate Governance update
How does this impact you and your business?
Mark Spinner
Eversheds LLP
17 April 2012

32. What we will cover today
• History of Corporate Governance
• The Stewardship Code
• Davies Review
• “Boards and Risk”
• “Comply or Explain”
• Executive remuneration
• What next

33. History
1992 1995 1998
Cadbury Greenbury Hampel
Combined
Code
2003 2005 2009
Higgs Turnbull Walker
Tyson
Smith

34. More recently
2010 February 2012
• FRC publishes Corporate Governance
Code
• FRC consultation on
February 2011 “Comply or Explain”
• Davies Review on diversity
March 2011 • BIS consultation on
• FRC Guidance on Board Effectiveness Executive Pay
• Economic Affairs Committee
September 2011
• Davies Report –
• FRC discussion on Boards and Risk one year on
October 2011
• Davies Report –interim review
• Kay Review

35. UK Corporate Governance Code
• This is the new name for the Combined Code and
applies to accounting periods beginning on or after
29 June 2010
• The FRC found no serious failings with the present
system; the code remains fit for purpose
• Refocus on underlying principles
• Moving away from box ticking to behavioural activity
• Focus on board quality and accountability
• Linked to new Stewardship Code

36. Key Changes
• Entire board should stand for annual re-election
• Emphasis on appropriate balance at board level
including diversity and gender
• External evaluation of the board at least every 3
years
• Emphasis on leadership of independent directors and
chairman
• Explanation in the annual report of business model
strategy
• Further emphasis on remuneration linked
to performance

37. Stewardship Code
• Aim
• Who does it apply to
• Optional not mandatory
• Reporting:
– how the principles of the Code have been
applied
– disclosure of information
– explanation for non-compliance

38. Stewardship Code
The principles
• Disclosure of how stewardship responsibilities are
discharged
• Robust conflicts policy
• Monitoring of investee companies
• Guidelines on when and how activities escalated
• Acting collectively
• Policy on voting
• Regular reporting

39. Davies Report
Recommendations
• FTSE 350 Chairmen to set targets for female
representation at board level for 2013 and 2015
• Listed companies to disclose proportion of women on
the board, holding a senior management position and
female employees across the whole organisation
annually
• FRC to amend Corporate Governance Code to require
publication of policy on Boardroom diversity
• Companies to report on above recommendations in
2012 Corporate Governance Statement
• Meaningful information on how appointments process
addresses diversity to be provided

40. Davies Report
Recommendations
• Investors to consider compliance with
recommendations when considering company
reporting and appointments to the Board
• Periodic advertising of NED positions
• Executive Search firms to draw up Voluntary
Code
• Extend search criteria outside the traditional
talent pools
• Steering board to be maintained and meet every
six months to monitor progress

41. Gender diversity post Davies
Women on Boards – one year on
• Percentage of FTSE 100 female directors up to 15.6% from
12.5%
• 47 new female appointments representing 27% of all FTSE
100 appointments up from 13%
• Majority of new appointees had no previous FTSE 100 or
FTSE 250 board experience
• No change to size or turnover on boards
• Only 11 all male boards at FTSE 100 companies down from
21
• At current rate of change will hit 26.7% female
representation by 2015
• Similar but slower progress in FTSE 250

42. Board diversity
Changes to the Code
• FRC has proposed amendments to the UK Corporate
Governance Code to strengthen the principle of
boardroom diversity
• In particular, a company‟s annual report will need to
include:
“…a description of the board’s policy on diversity,
including gender, any measurable objectives that it has
set for implementing the policy, and progress on
achieving the objectives”
• Changes will come into effect on 1 October 2012
• If you have not already made a statement on board
diversity, consider doing so!

43. Effective risk management and control
“The board is responsible for determining the nature
and extent of the significant risks it is willing to take in
achieving it’s strategic objectives. The board should
maintain sound risk management and internal control
systems.”
Corporate Governance Code, Main Principle C.2

44. Effective risk management and control
“The board should establish formal and transparent
arrangements for considering how they should apply
the corporate reporting and risk management and
internal control principles and for maintaining an
appropriate relationship with the company’s auditor.”
Corporate Governance Code, Main Principle C.3

45. Effective risk management and control
• Identify risks
• Use of risk matrices
• Not just internal controls
• Increasingly complex
• “Think the unthinkable”
• Appropriate to company‟s scale, strategy and
regulatory situation

46. Effective risk management and control
• Focus on strategic and reputational risks
• Increased focus on regulatory/legal risk
• Increased focus on risk management
• Separate Risk Committee
• Barriers
• Behavioural issue?
• Chief Risk Officer or whole Board issue?
• Auditors – a job for life?

47. “Comply or Explain”
• Principles rather than Rules based regime
• Proportionate
• Benefits
• The facts
• European Green Paper
• FRC consultation

48. Executive remuneration
“Levels of remuneration should be sufficient to attract,
retain and motivate directors of the quality required to
run the company successfully, but a company should
avoid paying more than is necessary for this purpose.
A significant proportion of executive directors’
remuneration should be structured so as to link
rewards to corporate and individual performance.”
Corporate Governance Code, Main Principle D.1

49. Principles of executive remuneration
• The ABI published revised principles for executive
remuneration (Sept 2011)
• The ABI recommends that companies should:
– support appropriate reward for exceptional
performance
– strongly resist any payment for failure
– understand that excessive/undeserved
remuneration:
• undermines the company‟s efficient operation
• undermines its reputation and
• is not aligned with shareholder interests
– not engage in crude benchmarking when seeking to
justify increases

50. Executive remuneration
• New guidelines place emphasis on need for:
– link between pay and long-term value
creation, i.e. careful balance of fixed and
variable pay
– alignment of remuneration with company‟s
strategic objectives and a proper reflection
of risk
– high degree of deferral in measurement of
performance over the long term
– executives to build up personal
shareholdings to ensure alignment of
interests with those of other shareholders

51. ABI‟s Guidelines
Key changes
• Quantum – for the first time, ABI gives guidance on
amount of remuneration
• Clawback – the new Guidelines say that shareholders
expect to see “malus and clawback” in remuneration
arrangements
• Pay below board level – suggestion that
Remuneration Committee should have an overseeing
role, particularly where risks or remuneration are
significant

52. BIS Consultation into executive pay
November 2011
• Link between executive pay and long term performance
increasingly hard to discern over last 10 years
• Median remuneration of FTSE 100 CEOs has risen from
£1m in 1998 to £4.2m in 2010
• Over same period the FTSE 100 rose 1.6% pa
• No clear reason, but commonly cited factors include:
– increased company size
– structure of remuneration
– transparency
– competition for talent

53. BIS Consultation
Improving Transparency
• Companies should provide clear and accessible information, but
remuneration reports becoming increasingly lengthy and
complex
• Options for change put forward in the BIS consultation
included:
– clarity on pay – currently no requirement to state total
aggregate remuneration figure
– increased clarity on link between pay, shareholder returns
and long-term objectives
– increased information about pay of employees across the
group
– greater clarity on remuneration proposals for the coming
year and transparency on the process of setting
remuneration

54. BIS Consultation
Role of Shareholders
• Shareholders currently have a non-binding advisory vote on
directors‟ remuneration report
• Are there other ways to engage shareholders?
– improve quality of information available & introduction of a
binding vote for shareholders
• concerns have been raised however surrounding the
expectations of shareholders, the effect of voting down a
report and the employment and contractual relationship with
executive directors
• two thirds of respondents were against introduction of a
binding vote
– shareholder representation on nomination committees
• there is evidence that this has had a positive impact in
Sweden
• over half of respondents saw no advantage

55. BIS Consultation
Role of Remuneration Committees
• Currently a requirement for all listed companies to have a
Remuneration Committee on a “comply or explain” basis
• Remcos have been under increased scrutiny since the financial
crisis
• Composition of the Remuneration Committee
• Possible changes put forward in the BIS consultation include:
– increased diversity/background of members, for example
independent members who are not on the board
– give employees a say on remuneration, either by the
appointment of a representative or a separate employee vote
– increased transparency on the use of remuneration
consultants, currently used by both committees and executive
directors

56. What next
• Kay Review
• Stewardship Code – FRC review
• Focus upon narrative reporting
• Auditors – compulsory retendering
• Risk
• Comply or Explain

57. Tax / VAT update
What’s new?
Clive Jones & Danny Blum
Eversheds LLP
17 April 2012

58. Tax/VAT Update
Some Finance Act 2012 Changes
• Rate changes
• Controlled Foreign Company regime
• SDLT & residential property
• Capital allowances
• REIT changes
• VAT cost sharing
• EIS and VCTs
• Employee incentives & benefits

59. Tax Update
Some Potential Future Changes
• Rate changes
• New General Anti Avoidance Rule
• Residence test changes
• New Patent Box and R&D Tax Credit
• Withholding tax on interest
• Integration of income tax and NICs & RTI
• Personal services companies
• Employee incentives and benefits

60. Consumer law update
Understanding the fundamental changes
ahead
Matthew Gough & Vicky Mann
Eversheds LLP
17 April 2012

61. Outline of this presentation
• Consumer law in the news
• Some examples of our work
• When does consumer law apply?
• An overview of consumer law
• The Consumer Rights Directive
• Reform of UK consumer law
• Introducing the consumer law team

62. Consumer law
in the news
• The OFT recently found that the overall annual value of
consumer detriment in the UK economy was £6.6 billion
• It has been estimated that the total annual volume of
reported and unreported consumer complaints is 120
million each year
• The average cost for a business is over £200 for dealing
with each complaint
• OFCOM has recently banned rollover telephone contracts
• Groupon has agreed to change its business practices
following a complaint by the OFT

63. Some examples…
Our work
• Anyone who deals with consumers
• Energy – utilities and renewables
• Retail – traditional and online
• TMT
• Financial Services
• Holiday operators and transport
• Education

64. Consumer law
When does it apply?
• Different rules apply depending on whether the trader
deals with a „consumer‟ or a business
• Businesses have considerable flexibility in B2B
Transactions and are able to impose a range of terms on
their business customers based on freedom of contract
principles
• Consumers, however, enjoy significant statutory protection
• A key issue is whether the contract is entered into with a
„consumer‟

65. Meaning of…
Consumer
• It is necessary to consider this definition in each
particular circumstance that you are contracting
in
• Consideration of the applicable consumer
legislation and the need to check the meaning of
“consumer” under such legislation

66. Meaning of…
Consumer
• The legal definition of “consumer” can vary. For example:
– Section 12 Unfair Contract Terms Act 1977 (“UCTA
1977”): To deal as a consumer, the person must
neither make the contract in the course of a business
nor hold himself out as doing so. It is also necessary to
consider the role of the retailer, and the retailer must
be making the contract in the course of a business
– Unfair Terms in Consumer Contracts Regulations 1999
(the “1999 Regulations”) states that a consumer is a
“natural person who is acting for purposes which are
outside his trade, business or profession”
– The main difference between UCTA and the 1999
Regulations is that the 1999 Regulations only apply to
“natural” persons

67. An overview of consumer law

68. Overview of consumer law
Unfair terms and consumers
• Unfair terms are regulated by:
– UCTA 1977; and
– The 1999 Regulations

69. Overview of consumer law
Implied terms
• Implied terms are provided by:
– Sale of Goods Act 1979; and
Supply of Goods and Services Act 1982

70. Overview of consumer law
Trading online
• Distance Selling Regulations
• E-commerce Regulations

71. Overview of consumer law
Doorstep selling
• Cancellation of Contracts made in a
Consumer‟s Home or Place of Work etc
Regulations 2008

72. Overview of consumer law
Unfair Practices Directive and Regulations
• Consumer Protection from Unfair Trading
Regulations 2008

73. The Consumer Rights Directive
• CRD adopted by EU on 11 October 2011
• Member states to implement equivalent
provision in to their national laws by 13
December 2013 and business now has an 18
month period to ensure readiness
• The intention is greater consistency in consumer
law across EU and the harmonisation of existing
laws

74. The Consumer Rights Directive
Scope of the CRD
• Contracts for sales of goods and services from
business to consumer
• A consumer is defined as any natural person who
is acting for purposes which are outside his
trade, business, craft or profession
• Does not cover financial services

75. The Consumer Rights Directive
Key Provisions of the CRD
1.“Cooling Off” Period: 14 days under the CRD. This may
be different to national legislation in the various jurisdictions
e.g. current period under UK law = 7 days. Model form for
withdrawing from sales contract
2.Pre-contractual information: Clear set of information
requirements e.g main characteristics of product,
geographical address and identity of trader, delivery charges
3.Rules on delivery and passing of risk: Maximum of 30
days from date of signing the contract (or time of formation
for online contracts) for the trader to deliver the goods to
the consumer. Trader bears risk and cost of damage/loss
until consumer receives goods

76. The Consumer Rights Directive
Key Provisions of the CRD
4.Harmonised rules on refunds: 14 day period to
reimburse consumers who cancel contracts including, if
applicable, the costs of delivery. Period begins on the day
on which the seller is informed of the consumer‟s decision
to withdraw from the contract
5.Digital Content: Clearer information at point of sale,
e.g. compatibility with hardware/software and limitations
on consumers right to make copies. Will apply to video and
music downloads
6.Online Sales: Consumers have a right to refuse to pay
if not properly informed of the prices before a purchase.
Online auction sites like “e-bay” must meet standard
information obligations

77. The Consumer Rights Directive
Key Provisions of the CRD
7.Ban on pre-ticked boxes on websites: European
Commission cited example of online sales of airline tickets
which may offer “pre-ticked” extras such as car rental or
travel insurance. Consumers will be exempt from any costs
of which they were not properly informed
8.Payment Card Charges: Prohibition under the CRD
from charging consumers fees that exceed the cost borne
by the trader
9.Pressure selling protection increased: Sales
transactions negotiated away from business premises
covered, not just doorstep sales

78. The Consumer Rights Directive
Dangers of non-compliance
• Non compliance could mean:
– Increased costs in dealing with more consumer claims
– Negative public relations
– Action by the relevant national authority, OR
– The consumer may not have to pay for
good/services received!
• Rights under CRD cannot be contracted out of, any
contract which attempts to do so is not binding

79. Reform of
UK Consumer Law
• BIS published a paper in November 2010
• BIS plan to issue a consultation paper on
consumer law in June 2012
• The possible reforms include a number of
changes we shall now mention

80. Reform of
UK Consumer Law
• The possible reforms are likely to include:
– An integrated statute bringing all the relevant
laws together
– Implied terms applying to goods to become
statutory standards
– Services to be subject to an outcome-based
standard

81. Reform of
UK Consumer Law
• One consistent set of remedies for all
supply of goods transactions
• A clear distinction between the laws that
apply to B2B and B2C transactions
• Digital products are likely to have specific
laws applying to them and may be treated
similar to goods

82. Introducing the team
Consumer law team
Matthew Vicky Kelly Alison
Gough Mann Holmes Walton

83. Introducing the team
Consumer law team
Susy Flavell Mary Kelly Eve England

84. Any Questions?
Please see us during the lunch break

85. www.eversheds.com
© EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.

86. Contract law update
Keeping your business one step ahead
Alison Brearey
Eversheds LLP
17 April 2012

87. Right of first refusal
(and NetTV)
•AstraZeneca UK Limited v Albemarle International
Corporation and other [2011] EWHC I574 (Comm)
•H-Switch to Propofol
•In the event that at any time Buyer [AZ] reformulates
or otherwise changes its Diprivan brand to substitute
propofol for the Product, Buyer will so notify Seller and
will give Seller the first opportunity and right of first
refusal to supply propofol to Buyer under mutually
acceptable terms and conditions

88. Right of first refusal
(and NetTV)
AstraZeneca UK Limited v Albemarle International
Corporation and other [2011] EWHC IS74 (Comm)
• What is meant by “right of first refusal”
– construction in the light of the context
– is the clause too uncertain?
– does it simply give an opportunity to
negotiate?

89. Right of first refusal
(and NetTV)
• Right to be given opportunity to match any third
party offer which AstraZeneca is minded to
accept; and
• if Albemarle matches offer, right to be awarded
the business
• AstraZeneca must act in good faith, setting out
precise terms of offer
• Albemarle must be allowed to match offer before
AstraZeneca accepts third party offer

90. Right of first refusal
(and NetTV) M-Claims
“No claim by Buyer of any kind, whether as to the products
delivered or for the non-delivery of the products, or
otherwise, shall be greater in amount than the price of the
product in respect of which such damages are claimed; and
failure to give written notice of claim within sixty (60) days
from the date of delivery, or in the case of non-delivery, from
the date fixed for delivery, shall constitute a waiver by Buyer
of all claims with respect thereto. In no case shall Buyer or
Seller be liable for loss of profit or incidental or
consequential damages”

91. Right of first refusal
(and NetTV)
• Deliberate repudiatory breach or genuine but
mistaken belief on the basis of legal advice?
• Judge rejects NetTV – exclusion clause to be
construed strictly
• Second sentence leaves Albemarle without
remedy for breach of clause H
• Court construes second sentence to apply only to
losses of type in first sentence

92. Construction
or judicial discretion?
Chalabi and others v Agha-Jaffar and another
[2011] EWCA Civ I535
Rainy Sky SA v Kookmin Bank [2012] 1 ALL ER
1137
• Commercially sensible/business common sense
• “Fairness”
• If there is only one construction, Court gives
effect to it.
• If there are two possible constructions, the more
commercially sensible solution is to be preferred.

93. Construction of Contracts
ENER–G Holdings plc v Philip Hormell [2011] EWHC
3290
“Any such notice may be served by delivering it
personally or by sending it by pre-paid recorded
delivery post to each party (in the case of the Buyer,
marked “for the attention of the directors”) at or to the
address referred in the Agreement…… Any notice
delivered personally shall be deemed to be received
when delivered (or delivered otherwise than between
9.00am and 5.00pm on a Business day, at 09.00am on
the next Business Day)……

94. Construction of Contracts
• ENER–G Holdings plc v Philip Hormell [2011]
EWHC 3290
• Service is good service, even if not personal, if
notice actually received by addressee.
• Notice clause not mandatory – “may”.
• Service is not good service if delivered by hand
but not received personally by addressee.

95. Gross Negligence
ICDL GCC Foundation FZ-LLC v The European
Computer Driving Licence Foundation Ltd [2011]
IEHC 343
“The Licensee’s exclusive remedy and the total liability
of ECDL-F in respect of any cause of action relating to
or arising out of this Contract will, to the extent that it
is not caused by a wilful act or gross negligence by
ECDL-F, not exceed 10% of the total amounts paid to
ECDL-F by the Licensee or £50,000, whichever is the
lesser amount.”

96. Gross Negligence
ICDL GCC Foundation FZ-LLC v The European
Computer Driving Licence Foundation Ltd [2011]
IEHC 343
• Is gross negligence different from negligence?
• Gross negligence must mean more than
negligence
• But how to apply to breach of contract clause:-
– business efficacy
– gross negligence here includes doing a deal
contrary to existing legal relationship and a
significant degree of carelessness

97. www.eversheds.com
© EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.

98. Workshop session
International differences in contractual
interpretation - lost in translation?
Richard Little
Eversheds LLP
17 April 2012

99. Introducing the International Panel
Remi Kleiman Antonio Bravo
France Spain
Yang Zhao Suzannah Newboult
China Qatar

100. What does it all mean?
ABC Ltd. shall use its best endeavours to supply and
licence to DEF Ltd. fit for purpose process control software
(“Software”). Following supply of the Software, ABC Ltd.
shall diligently provide support services and actively ensure
that the Software is appropriately maintained. DEF Ltd.
shall use all reasonable endeavours to ensure that the
Software is operated in appropriate environmental
conditions for the operation of the Software otherwise ABC
Ltd. shall not be liable for any losses whatsoever, however
caused. Prior to either party terminating this agreement
on grounds of force majeure or breach, the parties shall
negotiate in good faith an amendment to the agreement to
allow it to continue.

101. Questions for the panel

102. Please help yourself to our international
guides to dispute resolution

103. www.eversheds.com
© EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.