IFG's trust company business sold to AnaCap Financial Partners

IFG Group plc ("IFG") has announced that it has signed an agreement for the sale of its entire International Division to AnaCap Financial Partners II LP.  The International Division consists of Trustee and Corporate Services in multiple jurisdictions including Jersey, Cyprus, Switzerland and the Isle of Man. 

The purchase price is STG£70 million (€84 million) which will be paid in full on the completion of the sale, subject to adjustments upon finalisation of the completion accounts. Profit for the International Division for 2011 was STG£8.02 million (Group STG£22.6 million). Gross assets as of 31 December 2011 were STG£64 million (Group STG£184 million). 

The sale is subject to certain conditions including shareholder and regulatory consent.  

Declan Kenny, CEO of the International Division will remain with the International Division following the sale and he will resign from the Board of IFG.

JTC secures private equity investment to fund expansion plans

JTC Group is celebrating its 25th birthday today by announcing an investment by private equity firm CBPE Capital, which will help it replicate its success in Jersey across other locations.

In the 25 years of its existence, JTC has become a multi-jurisdictional business with offices in six locations and more than 160 employees. It currently has premises in Jersey, the United Kingdom, Switzerland, the British Virgin Islands, Luxembourg and Guernsey, and has an ambitious expansion plan to increase the geographical footprint of the business further through a combination of organic growth and acquisition.

JTC is no stranger to acquisitions – it acquired Caversham, a private client business based in Jersey, in 2010, some of Standard Bank’s Jersey-based Fund Administration portfolio in 2011, and Horizon Group’s book of Jersey-based trusts in 2012.

The minority investment by CBPE Capital is subject to regulatory approval.  

Jersey retains its position as the top ranked offshore finance centre

In a welcome boost to the Island in what has been a challenging few weeks, the latest Global Financial Centres Index (GFCI) sees Jersey retain its position as the highest rated offshore international finance centre.

The GFCI is a ranking of the competitiveness of financial centres based on over 26,000 assessments from online questionnaires.  It is compiled by Z/Yen Group and published twice a year by the City of London  Corporation.

The ranking is an aggregate of indices of five key areas: people (availability of a skilled workforce, the flexibility of the labour market, the quality of the business education and the skill-set  of the workforce), business environment (regulation, tax rates, levels of corruption, economic freedom and how difficult in general it is to do business), market access (volume and value of trading), infrastructure (the price of real estate), and general competitiveness (price, quality of life and economic sentiment).

In the overall rankings, Jersey’s score increased slightly and it retains its previous position of 21st in the world, ahead of Guernsey in 31st, Cayman Islands in 40^th, the Isle of Man in 44th, and BVI in 45th.


In the rankings of industry sectors, Jersey is the only offshore jurisdiction to feature and is ranked eighth in the global top ten for private banking and wealth management, just below Zurich and Toronto.


Jersey is also included at number 18 in the table that measures reputation, the only offshore jurisdiction to appear in the top twenty for its reputational advantage.


Geoff Cook, chief executive of Jersey Finance Limited, commented:


“For six editions of the GFCI in a row Jersey has been ranked as the highest rated of the offshore jurisdictions and we continue to hold a higher ranking than onshore competitors such as Luxembourg and Dublin. This is hugely encouraging and helps reinforce our standing and reputation for financial services globally. Alongside Jersey’s consistent success as the number one centre amongst competitor jurisdictions within the Index, it is also significant that the authors of the report have concluded that the reputation of offshore centres is continuing to improve.”


The report shows that the offshore centres are now rebuilding their reputations after suffering damage during the global economic crisis, with most increasing their scores since the previous report.


Overall in the report, London continues to be the number one centre globally, ahead of New York, though the report does sound a few warning notes for the City – in particular wanting that the increasing regulatory burden, the recommendations of the Vickers report and the proposed financial transaction tax could prove potentially damaging to the City’s competitiveness. Hong Kong, Singapore and Tokyo take the 3^rd, 4^th and 5^th places.

Offshore centres try to digest UK budget stamp duty changes

Offshore centres, and in particular those such as the Channel Islands which have a large number of property companies registered in the territories, are today trying to digest the changes in yesterday's UK budget, and to assess what it will mean for them.  At present, the detail is still hazy and so making an informed assessment is difficult.


Up until now, overseas investors buying property in the UK could avoid paying UK stamp duty if the property was owned by an offshore company, as they would simply acquire the shares in the company, with no need to change title to the underlying property.  In an effort to stop this (which had been much trailed prior to the budget), the Chancellor has  introduced a new 15pc rate of stamp duty, three times the previous level, for residential properties over £2 million bought by "certain non-natural persons".  So it would appear that there will be a very large tax hit on the initial transfer of a property in to corporate ownership.  


Given that the standard stamp duty rate for properties over £2 million was raised to 7% in this budget, then it is not impossible to conceive that it might still be worth putting properties into offshore companies if it was expected that they were likely to change hands a number of times, as the 7% tax each time a property is sold would be exchanged for a once-only 15% tax.  Even if this is not the case, it would seem on the face of it that those properties which are already in offshore company structures would almost certainly remain there. But it appears that George Osborne will also try to address these points, as he has announced a consultation on applying an annual tax on the corporate vehicles owning properties, together with  capital gains tax on the sale of shares in the vehicles.


It is not at all clear how he would achieve this - it is no simple matter trying to raise taxes on non-resident companies and individuals and it can be expected that having to have some form of annual valuation mechanism would be costly and cumbersome.  But whether or not he does manage to do it is of significant importance to the offshore world - if he is successful, then it is likely to lead to a loss of business for offshore trust companies; if he does not, then it is likely to ensure that the existing corporate structures are maintained indefinitely.

But it is not all doom and gloom for the trust companies - it appears that the new regime applies only to residential properties, whereas a great deal of the real estate held offshore is commercial property.  In addition, it is suggested that the new tax may only impact property held by companies, rather than in unit trusts or partnerships.  So it would appear that significant areas of the offshore real estate holding business will continue as usual.  For now, at least.

Offshore territories are beginning to establish DTA networks

In recent blogs I have commented on the fact that Jersey has begun to negotiate and sign a series of Double Taxation Agreements, in a marked departure from previous policy.  It appears that other British offshore territories are following much the same game plan.

Guernsey has recently signed a DTA with Malta, which will ensure that double taxation is removed from bilateral trade and investment between the two territories, and also permit tax information exchange on request.  The agreement is Guernsey's third DTA, but the first to be negotiated in line with the OECD model convention.

The Isle of Man entered into a DTA with Bahrain earlier in March.

Up until recent months, with a few notable exceptions, the offshore territories have entered into a raft of Tax Information Exchange Agreements with a wide variety of jurisdictions, largely in response to international pressure to clamp down on tax evasion.  However, concern was being quietly expressed in some quarters that whilst these TIEAs undoubtedly went some way to improving the perception of the cooperativeness of offshore territories, they did not appear to be having any impact on stemming the tide of anti-offshore rhetoric from many of the onshore jurisdictions, such as the USA and France, and therefore that the Islands had little to gain by signing them.  Whilst many countries held out the prospect of full DTAs being negotiated in the longer term as a “reward” for cooperating on information exchange, there were many sceptics about whether this would actually occur in practice.   It would seem that, despite the sceptics, there are now signs that the offshore jurisdictions will be able to build DTA networks over time.

The conclusion of DTAs, as opposed to TIEAs, has more obvious benefits for the offshore centres and may help them to reshape the nature of their business over time to compete with existing jurisdictions which benefit from a combination of low tax rates and extensive treaty networks, such as Netherlands, Luxembourg and Ireland.  This will undoubtedly not happen overnight, as DTAs are time consuming to agree and it is likely to take years of work to get a significant number in place, but these recent developments are undoubtedly a step in the right direction.

Offshore centres have had to be flexible and fleet of foot throughout their history, and the nature of the work that they have done has changed many times.  It seems that this new era of DTAs may herald the next chapter in the book.

Jersey to sign Double Tax Agreement with Qatar

Jersey has been working for some time to build strong links in the Gulf region, including opening a Jersey Finance representative office in Abu Dhabi last year.  Next week the Island will reap the fruits of its labours as it signs a double tax treaty with the Gulf state of Qatar, only the 4^th time the Island has entered into a double tax agreement.

Geoff Cook, head of the Island's finance industry promotional body, commented:  “The agreement makes it easier and more straightforward to conduct business between Jersey and Qatar and will therefore play an important part in encouraging increasing business flows between the two locations.”

Channel Islands lose their bid to save the fulfilment industry

In a huge, but not unexpected blow to the Channel Islands, they have today lost their bid to overturn the UK Treasury's decision to disallow Low Value Consignment relief (LVCR) on goods shipped to the UK from the Channel Islands.


The Islands had argued that  removing the LVCR for Channel Islands goods, but leaving it in place for all other non-EU jurisdictions, was not consistent with EU VAT law.  The High Court has rejected this argument.


Therefore, from April 1st, it is anticipated that VAT will be applied to all commercial consignments from the Channel Islands, regardless of value, effectively killing off the Islands' fulfilment business, which is estimated to account for around 2,000 jobs across the two territories.  


It is not yet clear whether an attempt will be made to appeal the decision.  The decision will impact not only the fulfilment businesses themselves, but also numerous other service providers who have developed service offerings based on the industry - such as trust companies and lawyers who assist with the establishment and running of the structures.

Channel Islands' LVCR litigation against UK Treasury commences

Yesterday saw the start of the Channel Islands’ High Court legal battle to prevent HM Treasury from singling out the Islands as being unable to use a VAT exemption for low value consignments, whilst permitting all other non-EU states to use the exemption.  There is a lot at stake - the Islands stand to lose more than 2,000 jobs in the fulfilment sector if they fail to win the case. 


The law suit has polarised opinion both inside and outside of the Channel Islands. On the one hand there are lobbyists in the UK who argue that the LVCR is a loophole which loses the UK taxman millions of pounds and is killing Britain's high street stores, as a whole range of retailers have chosen to sell their low value goods through online businesses based in Jersey and Guernsey, rather than through real stores in the UK.  They argue that it is not only economically sensible, but morally right to close down a "loophole" which has been ruthlessly exploited by the offshore centres at great cost to the UK tax-man.

On the other hand, you have the representatives of the Channel Islands fulfilment industry, and the businesses who have set up shop there, who argue that LVCR is not a loophole at all, but was a pragmatic acknowledgement by the UK Treasury that it is economically not viable to process VAT claims on goods of less than £15.  Indeed, many European countries have the same arrangements in place. They further argue that HM Treasury is entirely misguided in thinking that closing the LVCR to Jersey and Guernsey will lead to more revenue for HM Treasury and a resurgence of high street shops.  It is hard to fault the logic of this - the reason that online businesses are taking over from physical shops for items such as DVDs, books and music is simply that overheads of online businesses are lower, and they can reach a massively wider audience online and therefore buy in bulk, so business costs are lower.  It is a nonsense to think that the UK consumer will go back to high street shops if the Jersey and Guernsey fulfilment business is closed - they will simply buy their goods online from elsewhere, and the most obvious place would be from one of the other non-EU countries where the LVCR will remain in place (such as Switzerland).  So HM Treasury will have acquired no additional tax, and will have caused enormous damage to the Channel Islands' economies.


So although it may seem politically expedient to single out the Channel Islands and tap into the current tax-havens-are-responsible-for-all-the-world's-woes Zeitgeist, it is actually futile and damaging to do so.  Unless Danny Alexander has some Machiavellian masterplan to shut down online retail business altogether (impossible of course), he is never going to be able to get that revenue back into UK coffers unless he introduces some spectacular tax incentives for online businesses to set up in the UK (but, hang on a minute, wouldn't that make the UK one of those horrid tax havens?).  The only logical thing to do if he feels that the UK is losing too much to overseas online retailers would be to scrap the LVCR for all jurisdictions, but we know that the costs of administering the VAT would be prohibitively high and all it would succeed in doing is driving up prices for the beleaguered consumer in the UK.  The problem is that these are complex arguments that are not easy to communicate to the UK public.  So it's easier for Danny Alexander to give in to the political grandstanding and be seen to be taking decisive action against "tax havens".  Even if it's not only pointless, but damaging.


That being said, taking legal action against the UK government is still a bold move.  The political sentiment at the moment is very definitely hostile to "offshore" and even if the Channel Islands win the day today, then they run the risk of angering the UK government and suffering a backlash on other issues.


I will watch and wait with interest to see who wins the day in the High Court.  But I can't help thinking that it's likely to be the Swiss.

Jersey funds end 2011 with growth in numbers but drop in value

Last week I reported that the net asset value of funds under management in Guernsey had declined for the second quarter in a row, down £10.2 billion (3.7%) to £264.1 billion from October to December, but despite this had still shown an overall annual growth of £4 billion.


Rival fund centre Jersey has just released its December statistics, which show an increase in the number of funds registered in the last quarter, but a £4.3 billion decrease in asset value, to £189.4 billion.   This means that over the 12 months to December 2011, Jersey's fund industry grew by 2.5% in asset value terms, and by 5.1% in fund numbers.  


The fact that the fund numbers are increasing is a good sign for the industry, tending to show that Jersey remains attractive as a location for fund structures, but the underlying asset values are clearly experiencing some  volatility due to the Eurozone crisis and other macro-economic difficulties.

IFG and the roller-coaster ride of holding sale discussions in public

The majority of offshore fiduciary businesses are privately owned companies and most sales and acquisitions are negotiated behind closed doors, with strenuous efforts made to keep the mere existence of a sale process out of the public domain until there has been a successful signing.  It certainly isn’t always easy to achieve this – offshore jurisdictions tend to be small territories, where news travels fast and it can be difficult to keep industry gossip under wraps, despite the most tightly drafted confidentiality agreements.  Spare a thought though, for those who have to conduct their business in the glare of the public eye.

Last year, IFG Group, which has a number of financial services businesses within it, including an IFA business, a personal pension programme administrator and an offshore trust company, was approached by Bregal Group in relation to a possible takeover by the private equity house of the whole group at a price of 1.8 euros per share.  Being a listed company, IFG had to make the talks public knowledge by making a formal announcement, and the company’s shares rose strongly to a peak of 1.95 euros, only to plummet dramatically in September to a low of less than 1 euro per share after it was announced that the talks with Bregal had failed to lead to a firm offer.  Since then, the IFG share price has recovered to a small degree, but for the most part has languished in the doldrums for the best part of 6 months.

Today, however, saw IFG post a significant intra-day rise of around 25 cents, to 1.5 euros. The reason for the spike? - The Board of IFG has announced that it has received an unsolicited expression of interest in relation to a possible purchase of its International Corporate Trustee Services division, which contributes roughly 35% of the group’s profits from an income of £16.6 million.   It is no great surprise that an approach has been made – we are witnessing a period of a great deal of consolidation in the trust company market and there are more willing buyers out there than quality businesses available for sale.  For most trust companies, any exploratory talks following an offer can be carried out in the privacy of the target’s own four walls, and if the talks go nowhere, no-one need be any the wiser.  However, IFG does not have this luxury and whilst the share price rise must be a welcome development in many ways, the company must, given its recent history, be wary of the share price volatility that accompanies such talks in the public arena.

STM Group results point to difficult conditions for trust companies

The performance of the Jersey office of publicly listed financial services company STM Group Plc was the only ray of sunshine in a poor set of financial results released by the company today.


It is relatively rare to see publicly recorded accounts for trust companies, as the majority are in private ownership, and so it is interesting to see how STM has weathered the financial crisis.  And the conclusion seems to be that it has found the going tough. Group revenues declined to £9.8 million from the 2010 figure of £10.5 million, at a time when costs were rising.  As a consequence, a profit of £1.4 million in 2010 was translated into a loss of £300,000 in 2011, and EBITDA declined from £1.7 million to £1 million.


According to the financial statements, the Gibraltar office has been particularly badly impacted in 2011 by the Eurozone crisis and redundancies have been implemented there to reduce the overheads, but the Jersey office, and particularly the portfolio of business acquired from Zenith, has performed well.


STM was formed in 1989 with the aim of becoming a leading multi-jurisdictional corporate and trustee service provider, and has for some time been pursuing ambitious plans to expand through acquisition at a time when there is a clear opportunity for consolidation in the fragmented trust and company market. 


The company has been an active buyer – with acquisitions including Fidecs Group (a Gibraltar head-quartered business), the Atlas Group of Companies, Parliament Corporate Services Limited, Compagnie Fiduciaire Trustees, St George Financial Services Limited and the Zenith Group of companies.  Nevertheless, the latest set of figures would seem to suggest that it is not yet starting to reap the rewards of business synergies and increase in scale brought about by these acquisitions.


The financial crisis, together with increasing regulatory and compliance costs, is seeing some smaller trust companies which have for many years been reliable cash-cows, slipping in to unprofitability, whilst some of their larger rivals thrive despite the economic turmoil.  Although STM has set out with the express aim of being a consolidator, it still a long way behind some of the larger international trust companies in size. The strategic dilemma for the company will presumably be whether to forge ahead with its acquisition strategy despite the drop in profits, or whether to pause for a while to focus on efficiency.

US Senate gives Treasury a new anti-tax-haven weapon in its arsenal

You could be forgiven for thinking that tax havens and highway transportation don’t have much in common, but it seems you would be wrong.  Senator Carl Levin has linked the two in his latest campaign against tax havens, by putting forward an amendment to a US surface transportation bill which would give the US a powerful new weapon in its anti-tax-haven arsenal.

Yesterday the US Senate adopted an amendment to the bill which gives the US Treasury more power to combat tax evasion enabled by foreign governments or financial institutions, and could potentially lock some foreign governments and non-US financial institutions out of doing business in the territory altogether. In particular, the Treasury could prohibit US banks from accepting wire transfers or honouring credit cards from banks found to significantly hamper US tax enforcement efforts.

Although the amendment is doubtless a move which will offer Senator Levin the opportunity for some good sound bites about clamping down on tax dodgers, the move will not be welcomed by the US financial institutions, who are already struggling to digest the significant new bureaucracy which they will face when the 400 pages of new regulations come into force under the Foreign Account Tax Compliance Act (FATCA) in January 2014.  There is a growing feeling that whilst preventing tax evasion is a laudable aim, the methods being used by Levin and his supporters are placing an intolerable burden on US and foreign financial institutions, and that the US is becoming a jurisdiction with which some organisations are simply deciding to avoid dealing.

A final vote on the measure is expected on 13^th March. Then it will go to the Republican controlled House of Representatives, where it is likely to face more opposition.

Guernsey fund business contracts for 2nd quarter

The current business turmoil in international markets appears to be having a continuing impact on Guernsey funds, which have declined for the second quarter in a row.


The net asset value of funds under management and administration fell by £10.2 billion (3.7%) to £264.1 billion from October to December, following a decline of £3 billion in the previous quarter.
Despite the two consecutive quarters of decline, over the last 12 months total net asset values in Guernsey funds increased by £4 billion.


Jersey has not yet released its December statistics and so it is difficult to draw comparisons, but in the July-September 2011 quarter Jersey fund assets under management increased by just under £1 billion to £197.6 billion, and in the 12 months to September 2011 they grew by almost £13 billion.  


It is early days, but there seem to be signs that Jersey is closing the gap on its neighbour and business rival.

Intertrust acquires Walkers' fiduciary business

Walkers, the Cayman head-quartered law firm with offices in British Virgin Islands, Dubai International Finance Centre, Ireland and Jersey, has announced that Intertrust Group has agreed to acquire Walkers' corporate, fiduciary and company secretarial business, Walkers Management Services (WMS). 

Intertrust, which is backed by Dutch private equity boutique, Waterland Private Equity Investments, was founded in 1952 and has become a global leader in the trust and corporate services domain, with over 1,000 employees in 20 jurisdictions.   The acquisition will assist Intertrust in further expansion of its international footprint, particularly in key markets in the Americas. As a combined group after completion of the acquisition, Intertrust will operate with more than 1,100 people from 30 offices in 21 countries. 

The sale appears to be further confirmation of two trends - the divestment by certain of the offshore law firms of their fiduciary businesses to  allow a focus on core legal services, and the emergence of a small number of "super-consolidators" in the fiduciary sector - firms who are gaining a material size and global reach sufficient perhaps to sustain an IPO in the future.

WMS has been part of the Walkers Group since 2001, providing management services through its three core divisions: corporate, fiduciary and company secretarial services. Walkers and the Intertrust Group have announced that they intend to continue to work closely in the future, and to avoid disruption to existing client teams where possible.

Law-firm subsidiary businesses - a source of conflict?

The Lawyer has reported that, in a rare example of apparent misjudgment, DLA Piper co-chief executive Sir Nigel Knowles has become embroiled in a partnership storm after it emerged last week that he and a small number of other DLA partners have personally invested in LawVest (of which Knowles is non-executive Chairman) without declaring it to DLA’s board or the partners.

DLA Piper reportedly invested £62,500 into LawVest last year, and is aiming to redefine the lower and mid-market for corporate law services, by offering fixed price annual contracts.

  

What makes the personal investments in LawVest particularly controversial is that DLA Piper and LawVest have both stated that they expect that smaller DLA Piper clients will be referred to LawVest, which intends to trade under the brand name Riverview.  In a previous blog posting I have commented on the fact that this could create an interesting dynamic as it will apparently see a shift of existing business from DLA to Riverview, albeit at the smaller end of their client base.  In these circumstances, it is perhaps surprising that Knowles and the other partners who invested personally in LawVest are said to be shocked that their actions were being perceived by their colleagues as giving rise to a conflict of interest.

The purpose of this posting is not to examine what has happened at DLA in particular, but instead to highlight a complex area that more and more firms will find themselves having to navigate as ABS structures become common, and in particular as more law firms start investing in subsidiary businesses as a consequence of an increasingly competitive and dynamic market.  

Owning valuable capital assets within partnership structures often leads to tensions at the best of times.  In the offshore environment, the vast majority of law firms set up their own trust company businesses many years ago, which in many cases became very profitable and highly valuable, saleable assets.  In the early days, owning these businesses seemed to be a genuine win-win for the law firms – they were established by the partners in the business at the time, and were very cash generative.  Everyone was happy.  But as time went on, in most of the firms the political dynamics became increasingly complex, and in some cases led to relationships between partners breaking down.  There were a number of reasons why this tended to happen:

• In some cases, as the subsidiary companies became more valuable, it started to cause difficulty with building an economic business case for bringing new partners into the law firms which owned them, particularly if the prospective partner was not working in a field which would be likely to generate more work for the subsidiary, because their fee earning potential could not “justify” the interest in the trust company that they would acquire through partnership.  Firms responded to this in a myriad of different ways.  Some cut right back on offering partnerships in those areas (which of course led to longer term recruitment and retention problems), whilst others started to offer newer partners a share of the law firm profits, but no interest in the subsidiary businesses.  This latter approach led to two-tier (or sometimes multi-layered) partnership structures – a potential source of enormous tension and bitterness for those who don’t make it to the higher tiers;
  
• Some firms allowed individual partners, as opposed to the partnership, to have personal investments in the trust companies, whilst other partners had no interest.  This could lead to friction in relation to referral arrangements, such as suspicion that law firm fees were being discounted in order to be able to secure work for the subsidiary company – an arrangement which would benefit only those who had a personal investment.  The mere perception of a lack of transparency (as seems to have happened at DLA) would only inflame any tensions in this respect;
  
• As the subsidiary business became more successful, they in many cases started to out-perform their law firm founders and this in itself could become a source of tension – on the one hand from the people running the subsidiary business (who sometimes felt that the law firm partners were getting rich off the back of the subsidiary’s success, whilst contributing little directly to it), and on the other hand from the law firm partners, who might resent the fact that the contribution of the law firm to building the subsidiary brand in the subsidiary was being under-valued.  This dynamic is perhaps something which afflicts the professions more than some other more commercial businesses spheres, but is not unique to law firms.  Anyone who has studied the enormous rift that developed between Arthur Anderson and its consultancy business, leading to its bitter split, will know that the seeds of that debacle lay in exactly the sort of tensions described here;
  
• If the subsidiary business needed material capital investment, then this added an extra layer of complexity, because partners at different points in their careers are likely to have different views and vested interests in investment and divestment decisions.  For example, a partner who is close to retirement is not likely to be willing to take a large income sacrifice to finance a huge IT project which will not deliver any benefits during his tenure, whereas others might feel it is essential for future growth and that older partners, if they block it, are putting a brake on the business; and
  
• Finally, as some law firms started to divest their subsidiary businesses, it became apparent that the structures established by many firms had resulted in something akin to a pass-the-parcel situation: interests in the subsidiary business would be passed down from generation to generation of partners, but those in situ at the time of a sale would be in line for a huge pay-day.  As partners approached retirement, there was therefore a natural tendency for them to press for a sale of the business, whilst those who had been working towards, but not yet achieved, partnership would fear that everything they had been working towards might be sold out from under their feet. 

All of these are enormously complex dynamics.  The offshore law firms, and many of the accountancy practices, have been grappling with them for years, trying a myriad of different solutions and with varying degrees of success.  As the UK legal landscape changes and becomes more dynamic and competitive, and law firm businesses become less homogenous, so the firms here will need to start addressing similar issues.  The DLA Piper/LawVest venture has hardly got off the ground before the first problems have surfaced, and we can expect more to follow. 

There needs to be clarity, transparency and a shared vision of the future at the outset, which is clearly articulated.  If there is an absence of trust between those partners that those taking the key decisions are working towards a shared goal, have only the best interests of the firm as a whole at heart, and have a proper mechanism in place for recognizing what was once termed goodwill, tensions may become unbearable. 

UK firms can and should be seizing the opportunities open to them to reinvigorate and expand their businesses.  But those who rush into such ventures without thinking through the consequences and learning the lessons from some of those businesses which have gone down that route before them, might live to rue the day.