Functional business: legal support

Features Posted 12/11/21
Expert insights into the legal landscape for SMEs in the South East of England

For many businesses in the South East – in fact, all across the country – the last few months have been a whirlwind. With furlough withdrawn completely from 1 October, teams are returning to the office in droves and those affected by Brexit and the current HGV shortages are going through a period of disruption and upheaval. It’s a time of transition – a time to adapt.

There are also pressing legal issues SMEs are grappling with. Laura Claridge, a senior lawyer in the employment team at Clarkson Wright & Jakes (CWJ), a regional firm of solicitors based in Orpington, Kent, is seeing an increase in flexible working requests, where employees are keen to return to a mixture of home and office-based working. “These changes are causing deeps shifts in workplace culture and the office environment post-lockdown,” she explains. “Our key piece of advice is that businesses should be proactively engaging with employees about how, when or if they will be required to return to work. Doing nothing risks the current regime becoming the status quo and may inadvertently lead to the contract being changed by custom and practice.”

Laura and the team advise recording whatever is agreed in writing and asking the employee to sign it. “If employees are expected to come back, this needs to be clearly communicated and discussed. Employees who then want to continue to work from home will need to make flexible working requests to formalise the position. If business expectation is that work from home will continue, there needs to be clear messaging and consultation about what the new working week and practices look like, with particular consideration of how this may affect certain groups.”

Clarkson Wright & Jakes work with SMEs across all sectors providing assistance with buying/selling businesses, commercial leases, restructuring, tupe, HR support, employment disputes, changes to working patterns and staff returning to the workplace. “We are aware that businesses are currently affected by supply chain disruptions, a skills shortage and worker deficit,” says Dalvinder Dhinsa, a senior lawyer in the corporate and commercial team. “If your business requires any commercial advice, we are at hand to help.”

The next few months will bring the immediate challenges of the end of the CJRS furlough scheme, the culmination of the temporary relief from certain insolvency proceedings, such as winding-up petitions and statutory demands, and a budget is now scheduled for the end of October. Brexit continues to have an impact on businesses with differing effects depending on the sector and the uncertainty of changes due to come into force in January 2022 are a concern for the region’s exporters.

With all these factors considered, Jonathan Roberts, director at Leonard Curtis Legal, urges business owners to take proper advice early, whether it is from an accountant, solicitor or insolvency expert. “Leonard Curtis Legal launched five years ago, and since then, we’ve pioneered the move towards fixed fees to help smaller businesses access top-quality legal advice and deliver creative solutions,” he says. “We have four specialist areas of support – corporate and commercial, dispute resolution, real estate and services related to restructuring and insolvency, and also have access to a range of non-legal services and solutions for our clients.”

In the current climate, Jonathan highlights the importance of taking experienced legal counsel around distressed M&As (mergers and acquisitions) – particularly the sale and purchase of businesses out of insolvency processes. He adds: “We are also doing an increasing amount of work advising on Employee Ownership Trusts, which continues to be an attractive option for businesses across the UK who wish to protect their legacy and motivate staff.”

A year ago, South East law firms Moore Blatch and Barlow Robbins merged to create Moore Barlow, a multidisciplinary legal practice that advises both businesses and private individuals on a vast range of legal matters – real estate, M&As, data protection, debt recovery, insolvency and business recovery, business-to-business contracts and more. Corporate partner Peter Jeffery recognises that the legal landscape for SMEs remains challenging across the region as businesses find themselves having to adapt quickly to new changes in legislation.

Peter explains: “As well as the furlough scheme coming to an end, there is new legislation on the horizon such as the National Security and Investment Act, which will give the government more power to investigate and intervene in mergers and acquisitions. While the law is intended to police organisations that could pose a threat to national security, the lack of specificity in the legislation’s wording means it has the potential to drastically slow down M&A activity in many sectors. This should be a huge concern to the SMEs using deals to fuel growth.”

Natasha Lewis, managing partner at Horsham-based solicitors Lewis Denley, believes that there has never been a better time to start a business, explaining: “The pandemic has highlighted the cost efficiencies for an SME in that you do not need high-quality offices to run successfully; remote working is proving successful for many and there is no reason to think this will not continue.”

Natasha set up Lewis Denley in 2017 with business partner Colin Secomb. The firm offers a wide variety of legal support to SMEs, especially around commercial property. “Every SME needs to start somewhere, and we understand the commercial realities a business owner will face,” says Natasha. “We particularly enjoy seeing SMEs flourish as they utilise us as a trusted partner to navigate them through the legal minefield and challenges along the way.”

For Lewis Denley, one of the big changes to watch out for will be the IR35 regulation extending to the private sector. “The IR35 update had been postponed due to the coronavirus but SMEs will soon need to decide the employment status of self-employed or contracted workers,” points out Natasha. “This is in order to stop contractors who are effectively treated as employees not paying the same amount of tax as they would as registered employees within the company. Businesses that hire less than 50 employees will not be affected by the upcoming changes, unless they have an annual turnover of more than £10.2 million or a balance sheet total of more than £5.1 million.”

According to Thomson Snell & Passmore, business is booming across the South East. Now that lockdown restrictions have been lifted, the team are seeing a surge in activity. “From a corporate point of view, there is a huge amount of M&A activity taking place, as well as investment interest from both private equity and venture capitalists,” identifies Jason Varney, a partner in Thomson Snell & Passmore’s corporate team. Poh-Leng Devare, a partner in the commercial team, adds: “This has been mirrored from the commercial side, with a marked increase in demand for commercial agreements.”

The pair goes on to explain: “In terms of potential issues, given the levels of activity and rapid growth we are witnessing from the SME sector, it is really important that businesses who are looking for investment or potentially preparing themselves for an exit get all their legal documentation in order. Not doing so could lead to complications down the line for SMEs and can sometimes result in the potential investment or sale falling over.” They also encourage businesses to seek advice surrounding the end of government support loans such as CBILs and the temporary concessions that were made to allow technically insolvent companies to continue to trade.

From the commercial side, Thomson Snell & Passmore’s clients – particularly those in the food and drinks sector – have been experiencing issues with supplies, especially in terms of shipping and storage. “Due to the combination of elements such as the pandemic, Brexit and the blockage in the Suez Canal, packaging and crates have been in short supply,’ says Poh-Leng. “This has led to delays and additional costs for organisations to absorb. Businesses would be wise to be extra vigilant in terms of drawing up and checking all supplier agreements to help guard against these issues as much as possible.”

While it is encouraging to see such high levels of activity and growth in the South East SME landscape, the pair urge all businesses to ensure that they take appropriate legal and financial advice as early as possible. “This applies to all types of business transaction, from entering into new sales relationships with customers and suppliers to seeking investment and planning exit strategies. Getting the right advice early and getting all relevant documentation and processes in place doesn’t just help all kinds of commercial relationship run more smoothly, it can also massively impact a business’ bottom line.”

Tweets from @SEBmagazine