Month: November 2017

With the media sensation surrounding Paradise Papers tempering, talk has turned to the legal and financial consequences of the leak – but what about the longer-term reputational fallout for those embroiled?

One of the first to be publicly named and shamed was Lewis Hamilton – four-time Formula One World Champion, who allegedly avoided paying £3.1 million in tax on a private jet he had imported to the UK. Hamilton has since chosen to remain silent, perhaps recognising that winning the public’s hearts and minds, in relation to his personal financial affairs, is unnecessary in his pursuit of distinction on the track. His position as Britain’s greatest Formula One driver is cemented, with or without passing the general public’s somewhat arbitrary, moral character test.
Similarly, will viewers stop watching Mrs Brown’s Boys because its actors were outed as allegedly having diverted more than £2 million through an offshore tax-avoidance scheme? At its peak, the show was adored by over 11 million viewers – will fans refuse to purchase boxsets, calendars, t-shirts and other sitcom memorabilia in economic protest? Brendon O’Carroll, the creator of the show, rushed to defend his co-stars claiming that “every penny [of tax] was paid”. Apart from the increasing media interest in the actors’ broader financial affairs (a recent report claims the O’Carroll family owns £3.4 million in Floridian real estate), time is yet to tell whether the leaks will have any real impact on the sitcom stars’ careers.

By the same token, half a million tourists are unlikely to stop flocking to Buckingham Palace every year because the Queen’s estate was found to have invested millions offshore. The news may have caused a temporary spike in anti-royalist sentiment – but who could hold a 91-year old lady, who happens to be the world’s longest reigning head of state with an exemplary record of public service, accountable for what was essentially the work of accountants working on behalf of the royal purse?
It’s still early days but the criticism faced by the accused has, so far, been less scathing than that heaped upon those implicated in the Panama Papers.

This somewhat muted, post-publication reaction could be result of several explanations. Either the general public is applying some level of reason to the highly-charged, reputation-slaying, media headlines and recognises that tax avoidance is essentially “tax efficiency” in the eyes of those who commit the deed.

Or maybe leaks of this kind are a hostage to fortune by those seeking to wreak reputational damage, serving, in the long-term, only to cement the public’s complacency, as celebrities, politicians and the super-rich hiding their wealth offshore becomes a disappointing and repetitious norm. Perhaps the punch is diluted because we suspect that some of the most vociferous critics are doing the same…

23 November 2017

Reading this research commissioned by the Legal Ombudsman, Bell Yard firmly concurs that an early, simple, but genuine “sorry” can do wonders for limiting the damage to one’s reputation following a dispute – but be sure to be clear what you’re saying sorry for, and why. We’ve heard lawyers (but not exclusively this profession) who are reluctant to apologise for matters where they can see a technical get out. Failing to put oneself into the shoes of the complainant in an effort to understand their view, is likely to escalate what might be resolved before positions become entrenched. Language does matter. Paraphrasing the infamous Ms Rice-Davies, we would say that wouldn’t we…

11 November 2017

Reports that Appleby’s office in the Isle of Man may have been hacked in the Paradise Papers scandal, in addition to the firm’s office in Bermuda, will no doubt have sent shivers down the spines of various law firms, family offices and wealth managers based in the Channel Islands. Offshore centres like Bermuda, the Cayman Islands and BVA may all be fair game when it comes to the drive for transparency of the tax affairs of multinationals and the mega-rich, but the risk of data-attack closer to home is somewhat scarier.

For any firms concerned they may be vulnerable to data-breach, it is essential not only to work with your IT advisors to ensure encryption of sensitive documents and bolster your defences, as well as to educate all staff on appropriate email and internet use, prepare IT wise but also to have a communications crisis plan in place in case the worst happens. 

Bell Yard’s top communications tips for being ready for dreaded data-breach situations include:

1. Have a multi-disciplinary team of experts ready to mobilise in the event of a hack. PRs, lawyers, compliance and IT professionals will need to work in concert if a problem arises. The role of the PR expert is designed to avoid the firm hiding behind overly legalistic answers and to craft statements that will best resonate with the firm’s key audiences.

2. Be factual at the outset when confirming any attack and what is being done about it (e.g. are the police/NCA investigating?). Ensure all media and public calls are dealt with by a tight-knit team. It is best to avoid commenting on individual clients’ affairs or being drawn into speculation on the perpetrator.

3. Communicate with clients as swiftly as possible, directly and not just through the media. Website FAQs may not be the best way to go for HNW customers. Consider instead personal calls from the lead partner. It will be necessary to warn clients their financial data may end up in journalists’ hands and possibly you may need to recommend they use defamation and privacy lawyers too.

4. Don’t overplay the victim card: clients and the media will have little sympathy that IT systems weren’t sufficiently robust to keep hackers out, especially at a time when the public mood on tax transparency regards HNW financial data booty as in the public interest. 

5. Have a generic statement ready about the legitimacy and strength of your business to which you can add the context of the hack. 

6. Early, proactive engagement with your firm’s regulatory and professional bodies (such as the FCA, SRA and ICO) is imperative, and their breach guidelines followed. It may be appropriate to publicly demonstrate such engagement by way of demonstrating swift action and efforts to control the fall-out.

7. Keep updating your public responses, and ensure messages are consistent between recipients, as the situation evolves.

How a firm handles a crisis and re-establishes control will likely determine how quickly your reputation recovers. A defensive no-comment stance is unrealistic, even in a climate where you feel you can only be criticised. There is a tricky tightrope to walk between the right level of humility and robustness to emerge as unscathed as possible and to protect clients’ best interests. The key will be focusing on what your clients expect from you, by way of retaining their support. Clearly the risk of follow-on litigation could be present, so aim to move forward with clients on board.
Bell Yard has worked on various breach situations both in a front-line capacity and by guiding behind the scenes. We also have experience of working with clients in the Channel Islands. 

11 November 2017