THE PROELIUM LAW
LEGAL RISK MAP
|A. Corporate Structures||G. Duty of Care|
|C. Commercial Contracts||I. Accreditations|
|D. Succession Planning||J. Weapons, Armoured Vehicles, Dual Use Goods|
|E. Staff/Consultant Contracts||K. Data Protection|
|F. Host Nation/Local Laws/Extra Territorial|
Richard Stephens, a Partner in Proelium Law, the UK’s foremost legal authority on high-risk jurisdictions, explains that companies of all sizes consistently fail to properly protect themselves when doing business abroad.
Richard tells us: “Our Legal Risk Map® gives clients a quick visual check on the issues that may be relevant for them. As an ex-military man what I’m looking for is a nice tight cluster in the centre; what we find is that most companies veer out into the orange or red in at least two or three areas.”
Richard says that the problem is that most companies (rightly) focus on operational delivery. The danger of focusing on the task too much, without taking care of the supporting processes, is that:
Hard-earned profits can disappear
The company can become open to litigation
Staff fail to understand the company processes
- Reputations can be irretrievably damaged.
“We’ve found that among other ‘tail’ activities, such as logistics or HR, the legal aspects tend to be overlooked. This can be because legal language can be impenetrable, there is a fear of cost and there a perception that ‘legals’ are not required – ‘if we don’t mess up, we don’t need legals’ is how the group-think tends to go.”
Three areas where you might be exposed to serious risk
Richard tells us that there are three typical areas where companies slip up:
1. Local fixers
Many companies use local fixers to get things done on the ground. But how many organise a formal contract or take the time to look into what the local fixer does for his or her money?
Richard explains: “The elephant in the room here is bribery and corruption. You may think that you are safely one step removed, but when things begin to unravel with local characters, mud can get flung far and wide. Fall foul of the UK Bribery Act or the US Foreign and Corrupt Practices Act, however innocently or naively, and your government contract or UN work will shutdown forever. Custodial sentences are possible. Taking advice about local law in the jurisdiction and perhaps a local search into the person involved can save huge amounts of money being wasted on smoke and mirrors activity, as well as protecting your business.”
2. Consultants in high-risk areas
Companies sending consultants into high-risk areas may assume that there is no overt duty of care. Richard tells us that the opposite is true.
“In much the same way as IR35 legislation in the UK bestows employment status for tax purposes on contractors, so the same principle applies to a consultant. If they are working abroad for you and therefore unlikely to be able to work for anyone else, you have a duty of care.
If you have sent them to a foreign land, you have a responsibility for their welfare. If you haven’t taken steps to ensure they understand the risks and have proper protection in place, your firm could well be open to subsequent compensation or liabilities when they run into trouble.”
Richard says that it constantly surprises them that how many large companies have out-dated or unfit contracts.
“Whether it is your contract with consultants or suppliers, or the contract you have agreed with your customer, if it has not been reviewed in the context of the jurisdiction in which you are working, it may not be worth the paper (or even the email) it is written on.
We have seen multi-million dollar business arrangements based on generic 10 year-old contracts downloaded from the Internet. When things go wrong, trust me: this is a really bad place to be.”
To review you own Legal Risk Map online, visit, https://proeliumlaw.com
Adrian Henry Joins the Team
Adrian Henry, a specialist in emerging markets and post conflict insurance, has joined Bellwood Prestbury’s London office.
Just back from seven and half years living in Kabul in Afghanistan, Adrian brings a wealth of experience in setting up multiline commercial insurance.
Adrian worked with government and industry to launch the first private medical scheme in Afghanistan and is an expert in negotiating insurance / reinsurance for significant liabilities including death and disability, life, kidnap and ransom, fleet motor, property, cargo, construction, general liability, political risk and political violence cover in high-risk emerging market and post-conflict locations.
Email – firstname.lastname@example.org
Telephone – +44 (0) 7725 360 661