Wednesday, August 31, 2011

Court appearance for acussed sex-shop owner pushed to September 28

STURGIS -- The owner of Dick and Jane's Naughty Spot in Sturgis will appear in court at 8:30 a.m. on Sept. 28 after he was granted a continuance last week on five counts of failure to comply with the state's adult-oriented business law.

David Eliason, who opened Dick and Jane's at 1543 Lazelle St. on Aug. 2, has said his store's inventory doesn't meet the state's definition of an adult business.

Each count is a class one misdemeanor and carries a maximum penalty of a year in jail and a fine of $2,000.

In July 2010, Eliason wanted to open a store at 2611 Lazelle St., but the city denied him a retail occupancy permit, claiming that an adult-oriented business at that location violates state statute.

Eliason's 1543 Lazelle St. location already had a retail occupancy permit, which he claims is all he needs to open the business.

A Meade County grand jury, however, indicted Eliason for violating the state statue that prohibits an adult-oriented business from being within a quarter of a mile of "a child welfare agency, a private or public school, a public playground, a public recreation facility, a residence or a place of worship." Dick and Janes shares a parking lot with the Sturgis Community Center, is near private residences and is within a quarter mile of a church.

By Amanda Meade

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Tuesday, August 30, 2011

East Coast Construction Projects Try to Weather the Weekend's Storm Read more: http://www.digitaljournal.com/pr/403923#ixzz1WVycYGJD

Towson, Maryland

The hurricane that hit the East Coast this weekend will clearly impact many construction projects. Presumably, the projects around Maryland that are affected by hurricane are already under contract. Contractors will have to pull those contracts out to determine the extent of their entitlement for delays and should also determine the level of insurance that they have for each project. This insurance will include builder's risk insurance and builder's interruption insurance.

"The first thing a contractor should do is check their contract documents to see if the hurricane is covered," said Michael W. Siri, a construction attorney Maryland's Bowie & Jensen business law firm, with a renowned construction law practice. "Most contracts anticipate these types of natural disasters and outline a way to resolve any issues that come up."

Builder's risk insurance insures against the risk of physical loss or damage to property during the course of a construction project. This type of insurance is usually written as an "all risk" basis that covers damage stemming from any cause that have not been expressly excluded. Builder's risk insurance protects a company's insurable interest in materials and/or equipment used for the construction.

Additionally, builder interruption insurance insures construction companies against the loss of income after a covered event interrupts normal business operations. These types of insurance policies usually covers against expenses incurred under a covered event interruption. For example, if, as a result of Hurricane Irene, a construction company cannot perform work on a project because of flooding and must remove the water in order to proceed with the work, builder interruption insurance should cover both the interruption and the costs.

Certain scenarios occurring on construction projects throughout Maryland in the aftermath of Hurricane Irene will arise from the need for time extension or compensation and not damages for materials or equipment. The entitlement to a time extension or compensation for weather delays is dictated by the construction contract. For example, the 2007 AIA A201 states "if adverse weather conditions are the basis for a Claim for additional time, such Claim shall be documented by data substantiating that weather conditions were abnormal for the period of time, could not have been reasonably anticipated and had an adverse effect on the scheduled construction." The official commentary to the 2007 AIA A201 provides an excellent example, stating that four days of unusual rain could render the job site impassable or unworkable for seven days, but if the project is closed in, it may have no impact at all. The commentary recommends documenting unusually severe weather through records from the National Oceanic and Atmospheric Administration ("NOAA").

It is important to underscore that the weather must be abnormal. To use Maryland's current weather as an example, six inches of rain is not abnormal, but 40 mile an hour sustained winds is. Some federal government contracts, and in particular those with the Army Corps of Engineers, will define exactly how much rain or wind gusts will serve as the threshold for abnormal weather conditions.

Consistent with the AIA commentary, the contractor must not only show that the weather was abnormal but that it impacted the schedule. This is a highly factual driven analysis. For example, high winds and rains will prevent the use of construction cranes and will make certain portions of a job site impassable for many days beyond the hurricane. It could also delay material deliveries. However, assuming workers can get to the job site, it will not disrupt the running of interior conduit.

Assuming that a contractor can demonstrate the weather is abnormal and impacts the schedule, the next question is whether the contractor is entitled to additional time, money or both. In most contracts, adverse weather is an excusable but non-compensable delay. Thus, the contractor will receive only a time extension. As with most contract provisions, weather delays are a question of risk allocation, and most contracts allocate weather related risks and other "acts of God" to allow for time but not money. However, if a contractor anticipates having major equipment on the job site that will translate into significant extended general conditions costs when delays occur, the contractor should consider negotiating its contracts to allow for compensation for otherwise non-compensable delays.

Read more: http://www.digitaljournal.com/pr/403923#ixzz1WVyU0Gqk

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Monday, August 29, 2011

Price Gouging

"We encourage New Yorkers to ask the driver how much is the fare before they enter the cab to avoid getting ripped off. The NYS Federation of Taxi Drivers will suspend and report any driver caught scamming the riding public," said Fernando Mateo spokesman for the Federation.

Reports to the NYS Federation of Taxi Drivers indicate that Livery Cab Drivers from Lower Manhattan, Brooklyn, Bronx and Queens have been charging passengers more than the normal rate.

"In a communication from the Attorney General they expressed the same concerns that we are facing right now. We have been allowed to do street hails during this State of emergency but we must not abuse this privilege," said Mateo.

Attorney General Eric T. Schneiderman issued an open letter to vendors in areas forecast to be affected by Hurricane Irene to warn against price gouging, the inflation of the price of necessary goods and services.

General Business Law prohibits such increase in costs of essential items like food, water, gas, generators, batteries and flashlights, and services like transportation, during natural disasters or other events that disrupt the market.

"While most vendors understand that customers are also neighbors, and would never think of taking advantage of others during such disruptive times, these circumstances always require an extra sense of vigilance and preparation," Attorney General Schneiderman wrote. "As Attorney General, it is my responsibility to enforce the price gouging law, and while my hope is that I will not need to do so, my office is certainly prepared."

New Yorkers may contact the Attorney General's office to file complaints about potential price gouging activity online.

TO REPORT PRICE GOUGING: ATTORNEY GENERAL'S OFFICE

The open letter is addressed to New York State vendors, retailers and suppliers, including but not limited to supermarkets, gas stations, hardware stores, bodegas, delis, taxi and livery cab drivers. A full copy of the letter is available below :

August 27, 2011

This open letter is addressed to anyone selling necessary consumer goods and providing essential services in the region to be affected by Hurricane Irene.

New Yorkers have and will continue to rely upon you for the items needed to prepare for the storm, as we all stock up on water, food, batteries, and other essentials. It can be a thankless responsibility and we all owe you our gratitude.

While most understand that customers are also neighbors, and would never think of taking advantage of others during such disruptive times, these circumstances always require an extra sense of vigilance and preparation.

This notification should serve as a reminder to vendors and their consumers that state law prohibits price gouging at times when nature demonstrates its disruptive fury.

The New York General Business law forbids those who sell essential consumer goods and services from charging excessive prices during what is clearly an abnormal disruption of the market.

Those who do so will ultimately see a reduction in their profits, faced with penalties, fines and directives to set up reimbursement funds.

As Attorney General, it is my responsibility to enforce the price gouging law, and while it is my hope that I will not need to do so, my office is certainly prepared.

We will review pricing data, and take such complaints filed with office seriously, as we do with any matter.

New Yorkers have always been at their best when facing adversity, and I am confident that we will live up to that standard throughout this hurricane.

Eric T. Schneiderman New York State Attorney General

Saturday, August 27, 2011

Basel III: Chinese banks saving for new capital adequacy ratio

HONG KONG, Aug. 26 (Business Law Currents) – New capital adequacy rules from the China Banking Regulatory Commission (CBRC) are prompting banks to hit up investors in Hong Kong and Shanghai's capital markets. Part of the Basel III implementation process, the rules will require Chinese lenders to shore up additional capital to protect against credit risks.

Under the new rules, which are currently open to public review, systemically important banks in China will be subject to a minimum capital adequacy ratio (CAR) of 11.5 percent; other banking institutions will be required to adhere to a minimum CAR of 10.5 percent.

As reported by Reuters, the weighted average CAR among PRC banks was 12.2 percent at the end of June 2011, suggesting that banks in China should not be in a rush to raise funds since they already meet the minimum requirement under the new rules.

In a more conservative view, however, the core CAR of Chinese banks was 9.92 percent at the end of June. According to a mid-term capital management report from China Merchants Bank (CMB), China's sixth-largest lender by market value, banks should prepare for rainy days ahead. CMB recently remarked that banking businesses in China are being "confronted with serious risks."

Areas to watch out for include real estate loans extended to developers in China, loans made to government financing vehicles and, in particular, off-balance sheet credit business. While certain off-balance sheet items may be included in a bank's risk weighted assets, repackaged loans that are moved off a bank's balance sheets remain problematic as they can potentially understate a lender's risk exposure to bad loans.

In an effort to create a buffer zone for the new rules, as well as guard against risks, a number of mid-sized banks are bolstering their balance sheets. Earlier this summer, China Citic Bank Corporation Limited (CCB) issued 7.8 billion new shares in a dual Shanghai-Hong Kong rights issue, raising US$4 billion in total. Proceeds from the transaction were used to strengthen the bank's capital base. Calvin Lai and Richard Wang of Freshfields Bruckhaus Deringer advised CCB on the rights issue.

Last week leading Chinese insurer Ping An Insurance announced plans to funnel funds to its majority-owned banking unit, the Shenzhen Development Bank Co Ltd. According to Reuters news sources, the cash injection is the second contribution in less than one month and is likely to range from RMB$10 billion to RMB$20 billion (US$1.56 – 3.12 billion).

Recently, CMB disclosed plans to raise up to RMB$35 billion (US$5.4 billion) in a Hong Kong and Shanghai rights issue. According to a notice filed with the Hong Kong Stock Exchange, CMB will issue up to 2.2 shares for every 10 of its existing shares. According to Reuters news sources, CMB's CAR stood at 10.91 percent earlier this year, just above the regulatory minimum of 10.5 percent.

In addition to rights issuances in Hong Kong and Shanghai, Chinese banks are also waiting in the wings to launch dual-listings. This month, China's Guangfa Bank disclosed that it was waiting for a "good window" to launch its RMB$35 billion (US$5.5 billion) IPO in Hong Kong and Shanghai. Partially owned by Citigroup Inc, the bank initially planned to list in the third quarter of this year. Similarly, China Everbright Bank, which recently delayed its RMB$6 billion (US$937 million) HK IPO for the second time in two months, is also hoping to beef up its capital base.

Faced with stricter capital adequacy requirements, even large systemically important lenders in China are feeling the pressure to guard against credit risks. Earlier this summer the Agricultural Bank of China (AgBank) completed an issuance of RMB$50 billion (US$7.8 billion) subordinated bonds on China's national inter-bank bond market. According to a statement released by AgBank, proceeds from the issuance will be used to replenish the bank's subordinated capital.

The new capital adequacy rules are expected to come into effect next year. China's CBRC has said that major banks will be required to meet the new requirements by the end of 2013, while small to mid-sized lenders have until the end of 2016. Ahead of the deadlines, Chinese banks have already begun to save for a rainy day that is well on its way.

As reported by Reuters, large-scale fund-raising by Chinese banks in response to enhanced capital adequacy requirements has played a large role in dampening PRC capital markets. Combined with an increasingly dim outlook for stock markets around the world, Chinese lenders might not be able to bank on bourse fund-raising for much longer.

By, Helen H. Chan

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Friday, August 26, 2011

Navigating Employment Law for Small Business Owners

Elizabeth Milito, senior executive counsel for the National Federation of Independent Business, said small business owners often get stumped on employment law because it is not intuitive or easily understood.

"Most [small businesses] don't have a dedicated human resources department, so they're trying to figure it out on their own," Milito said. "They don't want to pay an attorney and they're not trained in law either. Employment laws are complicated."

Here are the three areas of employment law small businesses need to be conscious of, according to Milito and the NFIB:

No. 1: Employees vs. Contractors. In both federal and state laws, employers face issues regarding 1099 filing. Make sure that the classification you are giving to employers is correct and in accordance with Department of Labor and Internal Revenue Service regulations, Milito said.

"If somebody is working part time for you, you may say they're a contractor or consultant so you don't have to put them on your payroll or withhold taxes," she said. "As a matter of paperwork, it's easier to have them classified this way."

However, while it may be easier, it might not be legal. You may misclassify someone as a contractor, and not file the proper 1099 paperwork, which can result in fines and consequences for your business.

No. 2: Overtime regulations. In tough economic times, employers may be looking to cut expenses, Milito said, and may offer comp time instead of paid overtime. Although this may be fine with your employee, it may not be OK with the Department of Labor.

"You can't agree to break the law," she said. "It says that non-exempt employees are entitled to time and a half pay for all hours worked over 40. You can't agree to waive requirements." Check to see what classification your employee has before making any decisions on overtime, she said.

No. 3: Worker leave. Medical leave, Americans With Disabilities Act and the Family and Medical Leave Act are what Milito refers to as the "Bermuda Triangle," of employment laws. Be sure to review the guidelines under these regulations before you stop compensation or fire any employee. This goes for worker's compensation law too, she said.

"You don't want to run afoul under these laws," Milito said. "You may have obligations under these acts—it depends on state law and the size of your business. I would say it's a good idea to consult with an employment lawyer."

The NFIB recently hosted a Webinar entitle "Hot Topics in Employment Law for Small Business." For more information on the session, click here.

By, Kate Rogers

Thursday, August 25, 2011

NY aims to change its image to business friendly

By Daniel Massey

Lt. Gov. Robert Duffy read a newspaper article in January about an Illinois chief executive who wanted to relocate his company because he was unhappy with his home state's government. Mr. Duffy swung into action and got the CEO on the phone.

"I mentioned I was calling on behalf of Governor Cuomo in New York state and that we wanted him to consider coming to New York," Mr. Duffy said. "He actually laughed on the phone."

If a new marketing campaign that could cost as much as $50 million announced Wednesday by Gov. Andrew Cuomo has its desired effect, such laughter will be a thing of the past. The governor has appointed nine business leaders from across the state to help develop "New York Open for Business," which will promote the benefits of doing business in a state with a reputation for having an unfriendly attitude toward business.

"As we continue to transform Albany's approach to economic development, we must emphasize the many advantages New York has to offer, including our central location, our wealth of resources, our unequalled network of colleges and universities, and our diverse, innovative, educated and hard-working residents," Mr. Cuomo said, in a statement.

The state will recruit a major communications firm to build a campaign across various media platforms. The initiative, which comes with a price tag of $10 million to $50 million, could last several years, the governor said. It will be paid for with funds appropriated for advertising in the 2011-12 state budget, as well as other existing economic development funds.

It comes on the heels of the initial meetings of the governor's regional economic development councils, 10 groups across the state that have been tasked with coming up with economic development priorities for their regions. The groups will compete for $200 million in capital dollars and subsidies, and will have access to an additional $800 million in agency funding that is being streamlined into one application.

The nine business leaders who will help the state come up with its new message are: Russell Artzt, vice chairman of CA Technologies; Kathy Bloomgarden, CEO of Ruder Finn Inc.; Kenneth Chenault, chairman of American Express; Donny Deutsch, chairman of Deutsch Inc.; Shelly Lazarus, chairman of Ogilvy & Mather; Eric Mower, chairman of Eric Mower and Associates; Julie Shimer, president of Welch Allyn Inc.; G. Thomas Tranter Jr., president of Corning Enterprises; and Robert Wilmers, chairman of M&T Bank Corp.

"Cuomo enlisted a diverse panel of known business leaders from key industries such as technology and healthcare, because he wants this effort to succeed," said Jerry Kremer, chairman of Empire Government Strategies, a lobbying firm that focuses on economic development issues. "Every marketing campaign needs a salesman, and this is an all-star team."

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Wednesday, August 24, 2011

Two hats or one

By John Mackie

TORONTO, Aug. 23 (Business Law Currents) For institutions, regulators and investors, executives who wear two hats, such as CEO and chairman, are in an inherent conflict of interest. The situation is complicated further when roles are shared, such as in cases of co-chairs or co-CEOs.

One company that has been the center of this ongoing debate in Canada is Waterloo-based Research in Motion (RIM). In RIM's case, the complexity is taken to an extreme, with co-CEOs who are also co-chairs.

There is no prohibition against dual role officers in Canada. Many companies continue to combine the roles of chair and CEO, appointing an independent lead director as a means of ensuring appropriate checks and balances in the governance realm.

Many argue, however, that board chairs are responsible to investors, first and foremost, and must necessarily have an objective perspective when it comes to management – particularly hiring or firing decisions – and management's recommendations as to strategy and the like. While CEO's are often the primary contact with investors, they report to the board. In instances where the chair and CEO roles are held by one person, then, they are effectively responsible for overseeing their own actions.

Further complications can arise where two individuals hold a single role, or where an "executive" chair is appointed – again blurring the lines between oversight and execution.

Waterloo-based RIM, maker of the ubiquitous Blackberry smartphone, has been the subject of this governance debate for some time, most recently as a result of a proposal by Canadian fund company Northwest & Ethical Investments LP, owned 50 percent by the Desjardins Group and 50 percent by the eight Provincial Credit Union Centrals. At RIM's most recent annual meeting, shareholders were asked to consider and vote on a proposal that the role of chair of the board of directors be separated from the position of chief executive officer, and to require that the chair be independent.

While Northwest ultimately settled upon an arrangement with RIM which led them to withdraw their proposal, it's useful to review RIM's governance structure for some insight into the issue of executives wearing two hats.

In 2007, following an internal investigation into allegations of back-dating of stock options, then-Chairman and Co-CEO Jim Balsillie stepped down as chairman of the company, and a lead independent director was appointed. In the proxy circular disclosing the change, RIM stated that "consistent with current best practices in corporate governance, the roles of Chairman and CEO have been separated."

Pursuant to a subsequent settlement agreement with the Ontario Securities Commission (OSC), Balsillie also agreed to step down as a director of the company from February 2009 to April 2010. In May 2010, Balsillie was re-appointed as a director. Then, in a paragraph tucked into the company's third quarter earnings release in December of last year, RIM announced that Balsillie and Lazaridis had been appointed as co-chairmen of the board. The release indicated that the lead independent director continues in his role, "to facilitate the functioning of the board independently of management." The new structure was seen as an "appropriate and effective leadership structure" for the company.

In the proposal originally tabled before shareholders, Northwest noted RIM's own acknowledgment in 2007 of the division of roles as being a best practice in corporate governance, and referenced National Policy 58-201 and the position of the Canadian Coalition for Good Governance as support for the view that the two positions should be kept separate.

On June 30, two weeks prior to RIM's Annual Meeting, Northwest and RIM came to an agreement that resulted in Northwest withdrawing its proposal. RIM agreed that the company's board would establish a committee of independent directors whose mandate will be to (i) study the appropriate balance between an independent lead director or chair with full and exclusive authority customarily held by such an office holder, (ii) determine the business necessity for RIM's co-CEOs to have significant board-level titles, and (iii) propose and provide a rationale for a recommended governance structure for RIM, which will include clarifications of the co-CEO and chair roles, as well as the board's mandate.

RIM has agreed that the Committee will consult with Northwest in developing the specific terms of reference for its mandate and before it issues its report by January 31, 2012. The board will publicly respond to the recommendations of the Committee within 30 days.

It's an interesting approach which should serve to flesh out some of the very issues at the heart of the two hats debate. RIM has, in the past, commented that the focus on titles is inappropriate, and that its Co-CEOs also hold the co-chair positions "for the purpose of representing the company's business and operational interests with customers, suppliers, governments, regulatory authorities and other strategic parties consistent with the duties and authority of the office of the Chief Executive Officer" – i.e. "an external facing title to further the company's business interests in international markets."

Indeed, in RIM's words, "the traditional roles and responsibilities of a chair" are vested in the lead independent director.

Certainly, the international prestige argument is one that other companies have used, but consider a few specific examples from companies which are in the same industry. Steve Jobs doesn't hold both roles at Apple – perhaps the most relevant company from a competitive standpoint for RIM. The company has co-independent lead directors, with no one holding the chairman title. Google – which is a player in the smartphone space because of its Android operating system – separated the roles of chairman and CEO in April. And RIM itself operated with an independent chairman from 2007 to 2010.

On the Canadian front, there are a number of companies that have taken different approaches on the two hats issue. Electronic whiteboard maker SMART Technologies, of Calgary, had co-CEOs until 2007, with one also holding the position of chair. Since then, one of the company's founders has assumed the role of executive chairman, while the other acts as CEO.

At Magna International, Frank Stronach also held the role of executive chairman prior to surrendering his multiple voting shares in the company (he now serves as honorary chairman). Though the structure does not obviate the need for an independent lead director, it at least resolves the multiple roles concern.

Another company worth noting in any discussion on the two hats issue is Power Corporation, the international management and holding company controlled by the Desmarais family. Power has been consistent in its objections to the notion of separating the chair and CEO roles for some time. In the company's most recent proxy circular, for example, the company states that it considers it appropriate "that the positions of the chairman of the board and co-CEO overlap," in large part because of the company's status as one controlled by a majority shareholder.

The risks associated with the two hats issue will no doubt continue to attract debate among regulators, institutions and issuers seeking the "ideal" governance structure. It remains to be seen whether the appointment of an independent lead director is sufficient to calm these concerns over time, or further separation of the board and management functions is required.

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Tuesday, August 23, 2011

Internet Home Business Rules & Law To Follow

Many people have characterized the Internet as the new Wild West. They seem to think that nearly anything goes on the Internet, and that there are absolutely no rules or laws that govern the Internet. While it's true that there aren't as many crippling rules and regulations on the Internet, many people see this as a virtue, rather than as a drawback. The Internet is one of the few places in today's economy where there is any sort of innovation taking place. This is partly due to the fact that nearly any individual can start an Internet home business if he is willing to work hard at it.

It's also not true that there aren't any rules on the Internet. Although it may be true that there aren't any governmental laws that pervade the content on the Internet, much of it is self-regulating. If you plan to build an internet home business, for example, then you will most likely need to do business with Google.

Most people perform Internet searches through Google. Why do they do this? Well, largely because Google has built a solid reputation of providing good relevant search results without a large amount of spam, porn, and other shady Web sites. There is no law that says Google must not give users a large number of spam sites. It is simply in Google's best interest to do so if they want people to keep using their search engine.

Because of this, Google has some rather strict guidelines on what it considers to be spam or undesirable Web sites. If Google doesn't like your Web site, then they will remove it from their index, and the millions of people who use Google every single day will not be able to find your business's Web site. Therefore, it is in your best interest to pay attention to Google's rules and to follow them if you want the opportunity to start and run your own Internet home business. If you want to do business with other Web sites, like Yahoo or Facebook, then it is a good idea to follow their rules, as well.

Although there may not be many laws that pertain to the Internet, you should still follow most of the applicable laws that pertain to business in general. Some states require that you acquire a business license if you wish to have your own Internet home business. You must still respect copyright laws, and of course it's never a good idea to try to defraud people. You will also need to pay taxes on any profits that you may make from your internet home business opportunity.

Knowing which rules to follow and which to break is an important topic for any Internet entrepreneur building an internet home business to understand. It's always a great idea to find someone more experienced than you who is willing to share his or her knowledge on a topic like this.

By Steve Duval

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Monday, August 22, 2011

Greenhouse gas law aids state's clean tech growth

California voters did the right thing last November when they rejected an effort to kill AB 32, our state's landmark clean energy law. But now there are more legal challenges – from people who agree with the goals of AB 32 but don't like the details. They are still in court demanding that the state halt implementation of the emissions trading component of the law.

As business leaders, we say enough is enough. The reason is simple: prompt and full implementation of AB 32 is key to our state's economic recovery, and to building a more profitable and more sustainable future for California.

We already are seeing hints of what AB 32 could mean for our economy. Since the bill became law, investment in California's clean technology sector has skyrocketed, with more than $11 billion in venture capital flowing into the state. The National Venture Capital Association estimates that each $100 million in venture capital funding will help create 2,700 jobs directly and support other jobs indirectly, while generating $500 million in annual revenue over two decades. It is clear that clean energy policies are propelling the state down a positive economic path.

Clean technology has been one of the few bright spots in California's economy, with jobs in this sector growing at three times the rate of the rest of the job market. Clean tech businesses locate and expand here because California has provided clear signals that clean energy is a priority. That is why we have been the top state for attracting clean tech investment and venture capital, and why we have seen solid growth in business development and jobs.

As companies that are rapidly growing here in California, we understand the promise of clean energy policies first hand. AB 32, at its core, is an innovation engine. The law is propelling our businesses forward, helping bring research and manufacturing back to California, creating certainty and opportunity, and transforming the clean tech marketplace.

Based on our experience, we believe nothing will hurt California's emerging clean energy sector more than continued regulatory uncertainty. Delay threatens business growth and job creation, and it undermines the very market signal that has attracted so many clean tech manufacturers, investors and businesses to the state. If we cut and run, those businesses and investors will go elsewhere.

The latest bump in the road is a lawsuit that is creating obstacles for the California Air Resources Board in its full implementation of AB 32. If California falters, we are worried about what is going to happen to the promising regional carbon market – the Western Climate Initiative – whose success depends on California's participation.

AB 32 is not just one policy. It's a portfolio of strategies to transition California to a clean energy economy, including renewable energy standards, energy efficiency targets, an emissions trading program (a.k.a. cap and trade), and dozens of other smart, cost-saving measures.

As business people, we understand that market-based solutions are the most efficient way to send clear signals to companies and investors. They create a financial incentive for reducing emissions and a profit motive for developing innovative technologies that will lower operating costs.

So we say enough of the uncertainty and regulatory limbo. We need to push ahead and fully implement AB 32. California can then continue to lead the nation in cutting edge policies, as it has so many times before, and the rest of the country will follow. And we will all reap the benefits of our pioneering efforts while sending a message to the country and the world: California will not be deterred from its commitment to clean energy.

By Luka Erceg and David Hochschild
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Friday, August 19, 2011

Apparently We've Forgotten Who the Milkens Are

Michael and Lowell Milken's role in the rise of junk bonds helped make them rich. That wasn't enough for UCLA to turn down Lowell's $10 million donation—or even acknowledge his family's checkered past.

If, 20 years from now, a major public university were to name a program after one of the most controversial figures in the financial scandals of the late aughts—say, for example, the Angelo Mozilo School of Finance, or the Joseph Cassano Department of Economics—would anyone notice? Would anyone care? A little-noticed event last week suggests not.

Last Tuesday, the University of California-Los Angeles announced that it had accepted a $10 million donation from Lowell Milken to start the "Lowell Milken Institute for Business Law and Policy." The university's press release described Milken as an "international businessman" and the "co-founder of Knowledge Universe, the world's largest early childhood education company." The Daily Bruin, the Associated Press, Los Angeles Times, and Los Angeles Daily News all decided to leave their characterizations at that. But there's a lot more to Milken's story.

Folks who are aware of events that happened before the Clinton administration, however, will recall that Lowell Milken is the brother and business partner of convicted fraudster Michael Milken. Michael was the "junk bond king" who, in 1990, was sentenced to 10 years in prison for six felony violations of federal law (he served 22 months). Lowell, like Michael, was indicted on federal racketeering and fraud charges connected to insider-trading violations at Drexel Burnham Lambert, the now-defunct Wall Street investment bank where both brothers worked.

Lowell Milken was never convicted—it was widely reported that prosecutors dropped the charges as part of Michael's plea deal—but he was banned for life from working in the securities industry, and the New York Stock Exchange also banned him. Michael and Lowell "were the brain trust at Drexel Burnham," says William Black, a professor at the University of Missouri-Kansas City who was a top investigator of the savings and loan scandals in the 1980s. "Lowell was the legal side, which is to say 'legal' in quotation marks." Lowell was also a main character in Pulitzer prizewinner James B. Stewart's Den of Thieves—the definitive account of the rise and fall of Drexel Burnham, and a book you should buy. "I think the public record is what it is," Stewart said in a phone interview Monday. "It's amazing to me that people do seem to forget history so quickly. I mean, it's barely history."

"Lowell's reputation before and since these events is impeccable. He has never been found guilty of any wrongdoing."

Lowell Milken vigorously disputes the depiction of him in Den of Thieves and similar reporting. When I contacted the Milkens through their foundation to talk about this story, Lowell's spokeswoman provided an extensive statement, which I have reprinted in full below. The gist of it? "Lowell's reputation before and since these events is impeccable. He has never been found guilty of any wrongdoing."

Junk bonds—the high-risk issues of corporate debt that were Drexel Burnham's specialty—eventually led to the collapse of a number of large S&L partnerships in the United States in the late 1980s and early 1990s. Those collapses (often of firms with close ties to Drexel Burnham and the Milkens) fueled the larger savings and loan crisis, which eventually cost taxpayers some $500 billion. "To a very great extent, the market [in junk bonds] owed its existence to a single individual, Michael Milken, who acted, literally, as the auctioneer," economists George Akerlof (a Nobel laureate) and Paul Romer explained in a 1993 paper, "Looting: The Economic Underworld of Bankruptcy for Profit." Akerlof and Romer argue that Drexel Burnham's junk bond business was likely based on "manipulating the market."

Michael Milken was the high-paid Wall Street executive in the 1980s, and his brother (who's still his business partner to this day) was right there with him. As Kurt Eichenwald reported in the New York Times the week after the Milkens were indicted: "[Michael] Milken's compensation, which topped $550 million in 1987 alone, exceeded $1 billion in a four-year period. Surely no one in American history has earned anywhere near as much in a year as Mr. Milken." Eichenwald later noted that even after accounting for inflation, J.P. Morgan's "income never matched Mr. Milken's." A Drexel Burnham lawyer later testified that Lowell had told him that "the Milkens want to become the richest family in America," according to Stewart.

"Lowell, who the Department of Justice alleged was complicit in the frauds that Michael Milken confessed to committing, is trying to use his wealth to induce UCLA to repair his reputation."

When Michael Milken negotiated his plea deal with federal prosecutors, he "demanded that any plea agreement provide that all charges be dropped against Lowell," according to the Los Angeles Times' reporting at the time. The Milkens believe that Lowell was an innocent man who was prosecuted only to gain leverage over his brother—an argument supported by some of the news coverage in the early '90s. But Stewart paints a different picture of Lowell as Michael's loyal sidekick and "hatchet man," someone who was intimately involved with many of the incidents that led to Michael's arrest and conviction. Stewart describes the "compromise" thusly:

Finally, a compromise was struck: the US attorney wouldn't prosecute Lowell—despite an overwhelming amount of evidence.…Dropping the charges against Lowell was the most difficult decision for prosecutors. It was justified on the rationale that he had been little more than a lieutenant, faithfully carrying out Milken's master plan.

"Fraud is one of the leading paths to wealth and higher status," says Black, the former regulator. "Great wealth allows frauds to buy a greatly improved reputation. Fraud was Michael Milken's route to great wealth. One of the best ways to improve one's reputation in the United States is to be associated with prestigious universities. After being released from prison, Michael Milken taught at UCLA to try to rehabilitate his reputation. Lowell, who the Department of Justice alleged was complicit in the frauds that Michael Milken confessed to committing, is now reprising Michael's gambit and trying to use his wealth to induce UCLA to repair his reputation." (The Milkens disagree with Black's narrative, and note that many of Black's, Stewart's, and the Justice Department's claims about what went on at Drexel Burnham were "either never made or never proved after possibly the most intensive securities investigation in history.")

Lowell Milken, the billionaire philanthropist, education reformer, and former Drexel Burnham Lambert executive, just gave $10 million to UCLA. Andy Holzman/LA Daily News/Zuma

It's true that the brothers are generous philanthropists and have put an enormous amount of effort into rehabilitating their reputations. They've certainly come close to succeeding in their alleged "richest family in America" ambitions—according to Forbes, Michael is one of the 500 richest people in the world, and Lowell is reportedly a billionaire too.

When I asked UCLA about the Milken donation, a spokeswoman sent me a statement on behalf of the chancellor, Gene Block, who said the university "thoroughly reviewed all the issues that have been raised before accepting this gift." (The full statement is below.)

It's not surprising that UCLA wouldn't mention Lowell's complicated past in its statement on his donation. But reporters, at least, have an obligation to inform readers about that history when writing about a $10 million gift to start a program in his name. Perhaps students, faculty, and alumni will decide that the Milkens have paid their debts to society; still, people should know that the brothers' past, well, exists.

Milken's donation to UCLA is not without precedent. Albert "Chainsaw Al" Dunlap—another famous businessman who was accused of fraud and forced to settle with the SEC—gave $10 million to Florida State University in 2007. Some of that money was used to establish the "Dunlap Success Center" at the university.

"The UCLA thing," Black says, "is a great demonstration of one of my family sayings: 'It's impossible to compete with unintentional parody.'"

Statement from Lowell Milken's spokeswoman:

There has been much misinformation and confusion about Lowell Milken over the years with respect to a government investigation over twenty-five years ago that resulted in the indictment of Lowell along with his brother and others. This misinformation has been exacerbated by a number of books and articles that make claims and accusations, often based upon unidentified sources, that the government either never made or never proved after possibly the most intensive securities investigation in history.

Lowell Milken denied all charges and the Justice Department dropped all charges. It was widely reported that Lowell's indictment was a bargaining chip to pressure his brother and nothing has come to light in twenty-five years to disprove this assertion. Even Lowell Milken's settlement with the Securities and Exchange Commission was made without any admission or finding of any wrongdoing, and without any fine which was most unusual in these situations.

Lowell's reputation before and since these events is impeccable. He has never been found guilty of any wrongdoing. We respect the fact that UCLA believes in the rule of law, justice and fairness and that in the United States of America, its citizens are presumed innocent until proven guilty.

Statement from Gene Block, chancellor of the University of California-Los Angeles:

We are deeply grateful for the vision and philanthropic leadership of Lowell Milken, an alumnus who over the years has demonstrated a long-term commitment to the strength of UCLA students and faculty. His transformative and generous gift to establish the Lowell Milken Institute for Business Law and Policy will expand the activities and impact of one of the most outstanding business law and policy programs in the nation, ensure access for generations of future leaders in the field, and promote public understanding of this vitally important area. We have thoroughly reviewed all the issues that have been raised before accepting this gift. The UCLA School of Law represents and teaches the rule of law, justice and fairness, and consistent with those principles we are proud to count Lowell Milken among our alumni and to have him associated with this Institute.

—By Nick Baumann

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Thursday, August 18, 2011

Brands taking the law into their own hands

Imagine if hit TV show This Life had been set in a supermarket, rather than around a swanky law office. That might sound strange, but from the end of this year any company will be able to apply to offer legal services.

Until now, only law firms have been able to invest in or share the profits of certain kinds of 'reserved' legal work. But the activation of the Legal Services Act, which was passed in 2007 and nicknamed 'Tesco law', will turn the current regulations on their head and open the door for the likes of banks to supermarkets to enter the £12bn consumer law market in England and Wales for the first time.

Corporate brands, such as the Co-operative Group, will be able to offer legal services as a core part of their business, rather than having to outsource activities that are reserved for law firms or separate them financially as regulations currently dictate. Elliot Moss, business development director at law firm Mishcon de Reya, describes the move as: "The biggest change in the legal industry since its inception. This has never happened before."

Despite the act being nicknamed 'Tesco law', the supermarket says it has no plans to offer legal services. However, plenty of other brands are queuing up alongside the Co-operative Group to take advantage of the change in regulations, including the AA, Saga, Which? and Halifax.

Co-operative Legal Services (CLS) has been most vocal of all brands about its intentions to take advantage of the act. To do so, it will need to apply to become an "alternative business structure" (ABS) under the terms of the new law, once a regulator has been appointed to oversee the application process.

CLS already employs 360 lawyers and has a turnover of more than £24m a year. The brand confirms that it intends to apply to become an ABS at the earliest opportunity. A spokesman explains: "Assuming we are granted a licence, then we would be able to offer a full suite of solicitor services, should we choose to do so."

Consumer brands are still very much an unknown for people buying legal services - less than 10% say they would use a supermarket or high street brand for any of these services, according to a YouGov survey from November 2010 (see chart, below).

But many law firms feel it is unfamiliarity rather than genuine resistance that sees consumers expressing little interest in brands offering legal services. Ian Powell, business development and communications director at law firm Irwin Mitchell, claims: "Many will turn to a [consumer] brand they at least recognise."

Tesco Law

The spokesperson for CLS agrees: "Our research suggests that consumers have little knowledge of legal services and would value a trusted and consumer-focused brand to provide such services."

Meanwhile, Andrew Morton, a partner and head of affinity solutions at law firm Pannone, points out that until recently consumers would probably have been sceptical about the idea of buying insurance or a mobile phone contract from a supermarket. Both are now seen as standard.

He adds: "Legal services seem to be the next step, so there seems to be an opportunity to go to these [brand] organisations and create that demand, saying 'here is a potential stream of revenue for you'. It could add value to the customer's experience and encourage extra loyalty from those customers."

Morton is responsible for forming brand partnerships at Pannone, which has a consumer-facing business that focuses particularly on injury, personal finance and family law. Pannone expects to advise brands on how to set up their own legal operations and also to supply 'white label' services operated by the law firm but sold under brand names.

White label agreements are just one option open to brands wanting to take advantage of the Legal Services Act. Alternatively, they could start their own legal practices recruiting lawyers themselves, as the Co-op seems likely to do, or to buy up existing law firms.

Morton says he understands that a significant number of brands are investigating how to move into this sector and that most will seek to serve the basic legal needs of the mass-market consumer rather than going into high-value corporate law. This would include services such as will-writing and estates, personal injury, property purchases, employment and family law.

Aside from being well-known names to consumers, many brands could also bring their experience to the table in customer care, being able to explain complex issues to clients when offering legal services. Marketing knowledge will also be an advantage: many of the 14,000 legal businesses operating in England and Wales are small solicitors' practices, with little experience of large advertising budgets.

When consumers are asked which individual brands they would consider as providers of legal services, the Co-op scores 18%, level with the AA and only narrowly behind the best-performing brand, Barclays, at 19% in the YouGov figures.

However, Pannone's Morton says he thinks there will be a slow transition to consumer brands getting involved, rather than a huge influx of new entrants to the market as soon as they can apply to the regulator.

"At the forefront of this will be banks and insurance companies, where there is an obvious synergy with what they already provide. But there is the opportunity for supermarkets, utilities and any brand that has a strong database of customers," Morton says.

The act will not simply offer people more places to buy their legal services, says Paul Harding, principal of legal management consultancy ABS Advisory Partners. He suggests the change will reverse the balance of power in the relationship between consumers and lawyers.

"The consumer is now going to call the shots by insisting that conveyancing and wills are just commodities. They can be done with quite a low level of legal expertise and therefore you will find much more going on online," he predicts.

But just because one area of law will be seen as a commodity does not mean brands should be lax in the quality of legal talent they hire. Mishcon de Reya's Moss says that service delivery in law has to be as good as for any other branded product.

"They cannot have lawyers who are only OK because the risk for companies is that they fall down in an area they do not know. The risk for a brand owner like the Co-op or Tesco is that they actually diminish the relationship of trust that they have with the consumer," he says.

Although Moss thinks it unlikely that the best lawyers will be attracted away from large legal practices or the highest-paying "magic circle" corporate law firms, he predicts that some brands will establish their own training schemes to attract law graduates.

With consumer brands offering a genuinely attractive legal proposition on the horizon, another consequence of the act may be that solicitors are forced to embrace marketing.

They will need to promote themselves - sometimes for the first time - to compete with the lower prices that large consumer brands will be able to offer due to their size and scale.

A report by insight firm Pearlfinders in May found that marketing directors of law firms are already aiming to assert their positioning. It concludes: "Differentiation and personalised service is now key in the run-up to a 'battle of the brands'. Law firms are striving to position themselves as the voice of authority and quality - regulated, experienced and professional."

Solicitors trading on their experience and professionalism is only likely to work if they can convince consumers that the work they do is highly specialised. Since consumer firms are likely to try to capitalise on the commoditisation of legal services, this tactic may not work.

A more convincing strategy may be for law firms to attempt to use their strengths in marketing, such as focusing on recommendations. Word of mouth recommendation is by far the most influential factor when people choose a lawyer, according to the YouGov survey.

Andy Hoe, marketing director of law firm Russell Jones & Walker, which owns the Claims Direct brand, warns that marketing legal services can by its nature require some delicacy. He notes: "We help people deal with their problems. They only ever come to us when they have those problems, so we typically deal with what I consider to be a distress purchase."

One group of solicitors has been proactive in trying to alter this perception, however, by competing with large consumer brands through consolidation behind a joint marketing message. QualitySolicitors, a franchise brand aiming to have 300 branches across the UK by October, has brought together a network of law firms to offer a standardised service including Saturday opening and fixed fees. It has a nationwide presence in WHSmith and is launching a TV advertising campaign this autumn (see Case Study, below).

The application process for companies seeking to become an ABS under the Legal Services Act was supposed to open in October, but delays in appointing a regulator have now pushed that back to the end of the year. The QualitySolicitors franchise will need its extra lead time because when the Co-op and other brands move into this area, they are likely to bring the full force of their marketing power to grab a significant slice of the legal services market.

And TV shows based around lawyers may soon be just as likely to be based in supermarkets as legal chambers.

The Legal Services Act 2011 explained

Legal firms will be able to take outside investment from non-legal businesses. This means that consumer brands will be able to hold an ownership stake in a company offering legal services and law firms can float on the stock market.

Non-lawyers will be able to become partners of law firms, meaning that specialists in other business disciplines can influence their strategies. Law firms taking advantage of this provision can now become more marketing-focused organisations, run like any other business.

Law firms can go into business areas outside of law, meaning that they can diversify to compete with companies in other sectors and vice-versa.

Q&A

Andy Hoe, marketing director, Russell Jones & Walker (owner of Claims Direct)

Marketing Week (MW): How does Claims Direct's brand awareness compare with potential high street competitors?

Andy Hoe (AH): Our unprompted brand awareness is at a level of about 8%, but that level is significantly higher for the Co-op, Virgin or Tesco. Whether or not people would immediately associate those brands with legal services is going to depend on the promotion they do.

Something in the region of £65m to £70m a year is spent on promoting personal injury services across TV, online and directory media. It is already a very busy space, so the question is whether a recognisable brand can cut through that. The challenge within personal injury is because people come to lawyers to solve issues for them, they need the confidence that the person or brand they choose is going to be able to deliver the service that they are looking for.

MW: What are the marketing challenges now for brands solely offering legal services?

AH: About 15.5 million people have used the services of a lawyer in the past seven years, but only 7 million have used the services of a lawyer twice in the past 10 years. We are not required by everybody every day of the week. We do not even have an annual renewal date, as the insurance industry does, which enables us to remind people that we exist.

The advantage that household brands will have over the legal profession is that they are recognised, whereas most lawyers are not. From Russell Jones & Walker's perspective, that is where Claims Direct comes into play. We make no secret of the fact that we would like to become the biggest consumer law brand in the UK over the next three to five years. Part of that will be as Claims Direct and part of that will be as Russell Jones & Walker.

MW: How do you think consumer brands will seek to operate their legal services offerings, and how will you compete?

AH: The Co-op already has a burgeoning legal practice. There will be others that will consider the practice of white labelling. It is often the simplest, most straightforward way of getting into a new sector without the financial commitment.

The professional services sector is not as sophisticated as the retail sector and the legal profession needs to learn what retailers do best - customer satisfaction and customer service. The legal profession is not particularly good at making itself accessible enough to the general public and that is the aim of the Legal Services Act. That is what law firms like ours have got to get right.

Case study

QualitySolicitors

QualitySolicitors is the established legal industry's response to the competitive threat presented by the changes in the Legal Services Act. Anticipating that consumer brands like the Co-op, the AA and Saga are likely to knock many small practices out of the market with the weight of their marketing budgets, a group of solicitors have decided to collaborate, forming a standardised high street service across the country.

Chief operating officer Saleem Arif explains: "We want to become the legal equivalent of Specsavers, which revolutionised the optical services market by bringing together independent opticians under one brand, standardising the elements of the service and marketing that very hard. QualitySolicitors has gone from zero in May last year to 200 branches. By October, we aim to have 300 branches throughout the UK."

As well as having its own branded outlets, QualitySolicitors has signed an exclusive, long-term deal with WHSmith to place 'legal access point' areas and sales staff in its stores. These will allow people to make solicitor appointments, provide conveyancing quotes, sell will-making 'packages' and sign people up to the 'Legal Privilege' loyalty scheme.

It aims to have the access points in up to 500 WHSmith branches, with 130 having been installed at the beginning of August.

"It is probably the biggest move anyone has ever made in the legal market," Arif says.

WHSmith will have the option of investing in QualitySolicitors once a regulator is appointed to oversee implementation of the Legal Services Act at the end of this year.

Although Arif acknowledges that this could be possible "at some point in the future", he says it is not yet part of the business's plans.

However, Arif says legal services represent added diversity for the newsagent's business model. "Despite having reported record results this year and £90m profits, WHSmith is aware that some of its core business, such as books, DVDs and CDs, is on the decline. This is an opportunity to be first to market in a totally new area."

For the law firms that form the QualitySolicitors group, this is a bid to ensure survival once consumer brands with big marketing budgets enter the legal services market.

The group is making a pre-emptive marketing strike from September with two TV ads, featuring actress and presenter Amanda Holden, informing consumers of its new and expanding presence on the high street and in WHSmith.

Brands and their legal plans

Co-operative Group

One of the most recognisable brands to signal its intentions in the legal services market is the Co-operative Group. It already has a legal services brand and currently offers will-writing, house buying, personal injury and employment law services, either directly or through a panel of external solicitors.

The changes in the Legal Services Act would allow the Co-op to deliver all of these services directly from a single, in-house law practice. The Co-op has signalled its intention to apply to form this new kind of business structure at the earliest opportunity.

WHSmith (via QualitySolicitors)

As of this month, WHSmith will offer a legal service in 130 of its stores, in the shape of QualitySolicitors concessions. However, WHSmith is not currently allowed to own a stake in the company. Instead, the two have a long-term exclusive contractual arrangement.

Like Specsavers, which began as a collective of independent opticians within Boots stores, QualitySolicitors is an umbrella brand for a group of law firms that have agreed to come together to offer a standardised service. Although WHSmith would be free to buy equity in QualitySolicitors once regulations allow, that is not believed to be part of the newsagent's current business plan (see Case Study, below).

AA and Saga

Both the AA and Saga, owned by the same group of private equity companies, launched online legal service offerings in November 2010. These provide consumers with templated legal documents, such as a holding letter to a money lender or a pack of divorce documents, that can be drafted online for a fixed fee. Legal services through both brands are provided by Cogent Law.

Cogent's parent firm Parabis has said that it is investigating taking private equity investment and the Legal Services Act would make it possible for the AA's and Saga's owners to buy a stake and share profits, or for either brand to take the legal services they currently provide in-house.

A spokesman for the AA told Marketing Week that no firm plans have been made to change the current arrangement, saying that "in the future we are keeping our options open". However, he adds that "an internal legal operation might follow".

Tesco and Virgin Money

Though the Legal Services Act has been dubbed 'Tesco law', the supermarket has never stated any intention to move into the legal sector.

As with Tesco, Virgin Money has been repeatedly named in speculative reports, but the company says there are no immediate plans to move into the market.

Viewpoints

Ian Powell

Business development and communications director Irwin Mitchell (law firm)

There is a need to make legal services more accessible to those who need advice or want to purchase a legal product. The Legal Services Act will create an environment through which new entrants can come into a market that was traditionally the reserve of law firms and offer clients a way to access the services they need.

The common belief is that those consumer services that can be commoditised will be most affected. Some consumer brands will be able to embrace the concept and offer a professional service that will rival many solicitors - others will fail.

We have sought to build awareness of our law firm's brand within the geographical regions that we service and online, which is increasingly important.

We have also developed white label products and services, supported by insurance and a 24/7 legal helpline, which enables the firm to partner with commercial organisations that are looking to offer their customers legal services. The Telegraph newspaper is an example of this, with its development of Telegraph Legal Services.

Saleem Arif

Chief operating officer, QualitySolicitors (legal franchise brand)

The problem historically has been that if you wanted a really good quality of service, it has been impossible to know who is good and who is not. It has only been possible to compare law firms on price.

The old view that members of the public should be grateful for lawyers' services has changed. The balance of power has gone the other way and lawyers now have to provide a good level of service and look after their clients properly. Most law firms are not very good at marketing - they are not very good at reaching out to their past clients or attracting new ones.

Elliot Moss

Business development director, Mishcon de Reya (law firm)

The Legal Services Act will allow brands like the Co-op to go into a business area that they were previously prohibited from entering.

This will, therefore, mean that a lot of consumers at the lower end of the market will be able to buy legal services from a brand on the high street that they can trust, rather than a one-man-band solicitor. These companies will be offering all the things that a one-man-band practice just cannot do.

For a great swathe of day-to-day legal stuff for private individuals, this makes a major difference. But high street-branded legal services are for a certain type of person. If you always shop at Waitrose and Marks & Spencer, you are not going to suddenly shop at Lidl. If you come to Mishcon de Reya because you want to pay £500 an hour for a lawyer that is going to offer you specific personal advice, you are not going to go to your local high street brand just because they are called the Co-op or Tesco.

Andrew Morton

Partner and head of affinity solutions, Pannone (law firm)

The most interesting opportunity is for any type of organisation that has a large and loyal customer database, including utilities or supermarket chains. Ten years ago, we would never have expected to be sold insurance by supermarkets, but that is exactly what they are trying to do when you are waiting in the checkout queue.

They are going to want to 'pile them high and sell them cheap'. They are going to want to do commoditised legal services, in so far as you can with legal services. There is not going to be any big explosion of these people working their way into the market during 2012, but the opportunity will gradually become apparent to them. It has rather stayed under the radar so far.

For law firms like ours, it is an opportunity to create the demand by going to brands and showing them where this opportunity lies.

By Paul Harding

Principal, ABS Advisory Partners (legal management consultancy)

Solicitors have been in their ivory towers for many years, suggesting that things like house sales and purchases are highly professional processes, whereas consumers have been asking: is it really necessary to do seven years' training to buy and sell houses? We think it can be done much more cheaply, in a much more friendly fashion.

I am going through this experience with my 80-year-old mother at the moment. It is actually quite a terrifying experience having five solicitors sending you letters that you do not understand. I think accessibility is very important. The Legal Services Act is either going to force prices down or it is going to force standards up, perhaps both. There is no doubt that the accessibility and the friendly nature of the service provision is going to improve what marketers call 'the consumer experience'. That change is what this legislation is all about.