December 2008 - Tough and turbulent times in 2008


Business Law Update
from Cousins Business Law

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December 2008

Welcome to the 2008 year-end review from Cousins Business Law.

Tough and Turbulent Times in 2008

Gary Cousins

What a year! 2008 started with a credit crunch affecting the property sector; it’s ending in world economic upheaval, with many banks on the verge of collapse and business confidence at its lowest ebb since the great depression of the 1930s. At the beginning of the year, business people were discussing whether the credit crunch would affect the ‘real economy’; at the end of the year, the talk is of whether we can avoid an economic depression and simply hope for a recession instead!

The first sector to feel the pinch was the property sector, as banks stopped lending and funds dried up. Property transactions hit an all-time low and prices plummeted for those few transactions that did take place. Next hit were all those businesses that rely on credit – and that includes most SMEs - as banks became seemingly averse to lending at all. This came to a crisis point in October as banks fell like dominos and money seemed to stop flowing completely. As central bank interest rates came down (slowly for most of the year and plummeting recently), banks often responded by increasing the rates they charged SMEs and, at the same time, reducing facilities generally. As a result, we have seen more and more businesses fail. As the recession bites more severely, we can expect to see demand in the economy fall further and it is likely that most businesses will be adversely affected.

A recent CBI survey, ‘Economic Crisis: Impact on Real Economy’ revealed that 74% of businesses expect conditions in 2009 to be worse than in 2008 and 40% consider they will be ‘much worse’.

As a firm of solicitors, we have seen a massive rise in enquiries from worried business people seeking advice on directors’ duties and their responsibilities if their company should fail. We have been able to help many safeguard their personal situation, whether their company is on the brink of collapse or even if insolvency does not yet appear on the horizon.

We have also seen a large increase in commercial litigation generally. More and more businesses are taking disputes to court. This appears to be principally for two reasons. Firstly, it is being used as a tactic to delay or reduce payments – put up a defence and you can settle with paying less and later. Secondly, more SMEs are finding it financially better to fight a case that they would previously have let go, as the opportunities for making money from their usual business activities have started to decline.

We have also helped more and more businesses, both as landlords and as tenants, save large amounts of money by renegotiating their leases. A lease is a lengthy and expensive commitment and it is important – both for landlords and tenants – to get it right at the outset and when reviews come up. We have also assisted many tenants renegotiate their leases mid-term, and are pleased that this will help many survive in these difficult times.

Cousins Business Law started trading in April with a mission to provide SMEs and family-owned businesses with the type and standard of expert business advice that would generally only be available from partners of large commercial solicitors’ firms - but without the high prices that they would demand. Our information website was launched, which provides lots of useful articles and tips for people in business and, in July, the Cousins Business Law blog went live.

Working closely with clients, really getting to know them and their businesses, means we can offer timely and appropriate advice - and in a language they understand! In this way, we can be truly pro-active and keep an eye out for opportunities that are of real value to our clients.

Steve Petty joined us to run our commercial property and business sales areas and we are delighted that, through Steve’s dedication to clients, these practice areas have grown, despite the economic conditions.

Our other specialisms, most notably dispute management, directors’ duties, insolvency and professional negligence have all shown large growth this year with many new clients from across the UK (including the business centres of the Midlands and London) and also from Europe, the Americas and Australasia.

Looking to the Future

Cousins Business Law is one of the few solicitors’ firms planning to expand in 2009 and we are actively looking for lawyers to join our team – so, if you know of any good lawyers, ask them to contact me.

Looking ahead, we know that 2009 will be a difficult year for most SMEs: cash flow will be tighter, funding harder to find, disputes more common, there will be fewer opportunities and many more insolvencies. We are committed to help those in our business network, whether they are clients or not. We believe that we need to stick together, not only to help each other survive through the recession but to come out at the other end with better structures, contacts and opportunities in place. This way, we can all hope for a rosy future.

I’d like to take this opportunity to wish you all best wishes for the festive season and hope that we can all prosper in 2009.


Gary Cousins
0121 778 3212

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Legal Update

What the law has in store in 2009
  • The Health and Safety Offences Act comes into force in January 2009. The Act will increase penalties for businesses and organisations that do not comply with Health and Safety law from £5,000 to £20,000, and could lead to managers and business owners facing prison sentences for failing to comply with the Act.
  • New air conditioning regulations come into effect in January 2009, which will mean air conditioning units have to be inspected by an energy assessor. Read more in our blog here.
  • The Department for Business, Enterprise and Regulatory Reform (BERR) has announced a consultation on plans to create a set of consumer regulations which will work across Europe. The consultation is in response to the proposal on the new EU Consumer Rights Directive, which aims to harmonise consumer legislation across Europe, including protection against unfair contract terms and faulty goods. The consultation runs until 2nd February.
  • A report, to be published in the Spring of 2009 will look at copyright laws and regulations surrounding digital media and communications in an attempt to encourage greater use of digital media and IT.
  • The Department for Business, Enterprise & Regulatory Reform (BERR) is considering delaying proposed new legislation previously announced in the light of the current economic downturn. These include proposals to extend flexible working rights to parents with children under the age of 16.
  • House builders might usefully spend some time in 2009 getting ready for the new code of conduct to be introduced in March 2010.
Useful Links

Here’s a list of the most Useful article on the Cousins Business Law website, each containing useful information and advice:

Directors’ responsibilities in time of financial trouble

What’s your landlord doing with your rent deposit?

A quick guide to lease negotiation

Understanding your duties as a director

The zero tolerance approach to bad debt

If you produce material on your website which might be of interest to our readers let us know by email.

Litigation Madness

Upholding our rights to be miserable
What with all the depressing economic news of late, we at Cousins Business Law thought it was about time that some more positive news stories were published in the press and media. However, if a court case in Romania this year is anything to go by, this would be an infringement of our Human Rights!

The Romanian Senate decided that all the bad-news stories were depressing the populace and were detrimental to “the health and life of the people.” They therefore passed legislation that required the media to broadcast one good-news story for every bad-news story.

However, the Senators’ joy was not to last and the legislation was soon struck down by the Romanian courts as unconstitutional. The court decided that the good-news law unlawfully restricted freedom of expression under the European Convention on Human Rights.

Doesn’t it feel good to know that the EU is upholding our rights to be miserable?

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Cousins Business Law is a member of the Law Society & regulated by the Solicitors Regulation Authority. Head Office: Swan House PO Box 11543, Birmingham, B13 0ZL. Tel +44 (0)121 778 3212. Fax: +44(0)121 275 6155