Letters to the Editor

THE DIRECTOR'S CUT

Before any solicitor, whether a partner in a law firm or employed in-house by a company, takes up the offer of a non-executive directorship, he should be aware of the risks of doing so (see [2003] Gazette, 6 March, 20).

Despite the recommendation by Derek Higgs in his report that companies insure the potential liabilities of directors for negligence and breach of duty, no affordable insurance exists in the market for the kind of costs and liabilities with which directors can be faced - as in the 6 billion a head Equitable Life litigation against its former directors.

However well a solicitor non-executive candidate may do his due diligence before and during his appointment, there is always room for things to slip through the net.

Given the power of action groups of shareholders - and many boards' fear of them - given the relative uncertainty of the law on directors' responsibilities, given the uncertainties of the criteria for excuse under section 727 of the Companies Act 1985, and, finally, given the cost of legal services in major cases, the risk for non-executives must be approaching the unacceptable.

However tempting the carrot of 'escape from intellectual claustrophobia' Vanni Treves seeks to dangle before solicitors, I suggest that the best course would be for solicitors to deny themselves the pleasure of directorships until their legal responsibilities are better defined and clearer.

The truth is that for generating 'intellectual claustrophobia', the experience of being sued for billions takes some beating.

Peter Martin, solicitor, Swindon, Wiltshire

TAKING COVER

Following John Burman's letter (see [2003] Gazette, 27 February, 15) we can all see that unless they are standardised, it will be necessary to police developers' contracts from 1 April when the amendment to the Council of Mortgage Lenders (CML) handbook will prevent conveyancers from submitting a certificate of title until they obtain a cover note from a new home warranty provider that it has carried out a final inspection.

Perhaps conveyancers should already be scrutinising developers' contracts, as the NHBC has from 1 January changed/clarified the definition of 'legal completion' in its Buildmark policy.

The Buildmark guarantee is now issued on legal completion or substantial compliance with NHBC standards, whichever is later.

But to relieve any sudden panic, properties registered with NHBC pre-1 January are still covered by the old definition.

The change is only to properties registered after 1 January 2003.

Tim Higham, assistant solicitor, Awdry Bailey & Douglas, Devizes, Wiltshire

CUTTING RED TAPE

Solicitors who think that they have not seen enough of the bureaucracy in dealing with legal aid requirements will take pleasure in dealing with the bureaucratic requirements imposed by the Data Protection Act 1998 and the Electronic Commerce Regulations 2002.

The Data Protection Act requirements are fairly well known, and in summary amount to every business that uses a computer being required to register someone as a data controller to administer the usual plethora of procedures.

How this helps our clients is not specified.

The Electronic Commerce Regulations give more joy.

Anyone with a Web site must provide, name, address, electronic contact details, details of their professional body, the professional title and members' state where the title has been granted, and a reference to the professional rules and the means to access them.

(Does this mean to refer to every partner?) Furthermore, the provider must state its VAT registration number.

Sadly this conflicts with advice from HM Customs & Excise, which unambiguously says that as a fraud prevention measure it requests that you do not list your VAT number on your Web site.

This anti-fraud warning was also transmitted through the Law Society some time ago.

One could hope that the definition of 'an information society service provider' was narrow enough only to mean where you collect money or enter into contracts through your Web site, but such is not the case.

It is defined as 'any service normally provided for remuneration, at a distance, by means of electronic equipment', which on the face of it seems to extend even to situations where you do business by e-mail without having a Web site.

Henry Brookman, Brookman Solicitors, London WC1