On Thursday 28th April, MBM’s Dispute Resolution Team played host to a packed audience at the Merchant’s Hall in Edinburgh, where the sell-out conference focussed on a range of financial challenges facing SMEs today. As frequent litigators against banks, the DR Team were recently recognised for their success in this area in winning “Litigation Team of the Year” at the Scott & Co Legal Awards 2016. However, welcoming delegates from a diverse range of business backgrounds and interests, Cat MacLean, Head of the DR team at MBM, explained that in pulling together the second of their conference series, the aim had been to expand bandwidth a little and look at what, aside from banks and banking problems, are the big issues facing smaller owner managed businesses.
The focus in the first half of the event was very much on business disputes: how to prevent the time, cost, stress, damaged relationships and reputational risk that go along with conflict, and how to maximise positive outcomes, and the audience heard from John Sturrock QC of Core Solutions on how mediation can successfully resolve business disputes. John looked at the problems which lead to entrenchment, and asked how these can be addressed and how better conflict management strategies can be embedded into business processes. John was followed by Mark Beaumont of Annecto Legal who looked at the situation in which disputes cannot be resolved: in these circumstances, how can the risk of litigating, especially for small businesses, be reduced? Mark explained that for the majority of businesses, claims that can be worth 6 figures, are avoided because they are too expensive and uncertain. When this happens, Third Party litigation funding is clearly the answer, and Mark talked us through how this type of funding works, and how businesses can shift the risk and contingent liability off their balance sheet while sharing the upside with the Funder, who typically looks to return between 65% and 85% to the client.
Stephen Pearson from Virgin Money spoke next, on the “virtuous circle” and the Virgin motto of “Everybody’s Better Off”: a motto which has served Virgin well since its inception, but which plays out equally well for smaller businesses. He talked compellingly about the case for doing the right thing by the community, and creating a vital link between business and community, sharing gain across the company and with colleagues, corporate partners and suppliers, customers, and the community.
The conference then heard from two individuals both of whom are experts in restructuring, from rather different perspectives: David Menzies of ICAS, who is Director of Insolvency, and Will De Lazlo of turnaround fund Agathos. In a momentous week for restructuring with the failure of BHS and Austin Reed, David outlined the challenges and opportunities business faces when considering restructuring. Will in turn looked specifically at stressed and distressed companies, and the help that can be provided very quickly to those businesses who find themselves in what he described as the “death roll” with cash squeezes, reduced bank funding, reduced sales and creditor pressure. He described what can be done to avoid distress, but also what can be done for companies in distress, especially in complex situations, and how quickly apparently very negative experiences can be turned around with the right kind of support.
Finally, a spellbound audience were fascinated by a talk from Detective Chief inspector Andy Fyfe of the National Fraud Investigation Bureau who described chillingly the different types of fraud currently being perpetrated on businesses – from insider frauds, to payment diversion frauds, to cybercrime, and how and when to engage law enforcement. The audience left resolving firmly to change their passwords as soon as they returned to the office!
On Tuesday 24th May, Cat MacLean was also invited to speak to MPs at Westminster at an event organised by the All Party Parliamentary Group on Fair Business Banking, to consider barriers to justice, and ways in which cultural change could be achieved in banking. She spoke alongside leading English expert Alison Loveday of Berg, Nikki Turner, founder of SME Alliance, Ann Pettifor, a UK-based economist and director of Policy Research in Macroeconomics (PRIME), Mark Chidley of the Financial Services Consumer Panel, and Richard Samuel, Barrister of 3 Hare Court Chambers. A packed committee room heard from Cat that the key to achieving a level playing field, and to making sure that the banks and their customers can approach disputes from a basis of equal bargaining power, is to take away the power created for the banks by their comparatively bottomless pockets, and to remove the power to starve a customer of funds by lengthy litigation. For more on the event, click here.