Codes of Practice for laworld members

1. Publicity and ethics

1.1 Members shall avoid adverse publicity, both for LAWorld, other member firms and their own law firms.

1.2 Members shall impose the obligations from article 1.1 upon those they employ or hire.

1.3 Members shall only seek publicity when this is in accordance with the wishes, the interest of their clients and in conformity with the rules of their national law society.

1.4 Members shall abide with the laws and codes of their national law society.

1.5 Members shall endeavour to represent and refer only clients of good standing.

2. Business referral procedures

2.1 On receipt of a business referral, acknowledgement will be given within three working days.

2.2 Referral work must always be the subject of an engagement letter to be issued by the member firm to whom the work is referred. The following items must be included in the engagement letter or in a covering letter sent with the engagement letter:

(a) a description of the work to be undertaken.

(b) nature of independent contractual relationship and responsibilities.

(d) a statement indicating the professional indemnity insurance which is required in the jurisdiction, and the amount which is actually held by the firm.

(e) the name of the partner responsible for carrying out the work together with details of staff assigned.

(f) the hourly charge-out rates applicable. Copies of engagement letters must be made available to referring firms upon request.

2.3 A partner must always be responsible for satisfactory completion of the work referred by another member.

2.4 No member shall conduct business in the name of LAWorld but only in the name of their own independent firm.

2.5 Members shall not refer work where they foresee that the client will not be able to settle the fees. Settlement of the fees, however, is the responsibility of the member to whom the work is referred. Members to whom work is referred will generally ask for an advance payment and the referring law firm will inform the client accordingly.

2.6 Members shall not accept referrals for which they do not have the necessary expertise. In that case they will recommend another law firm that has the required expertise.

2.7 After having received all the necessary information, members will give their first opinion as to the referred case, to the client within 10 working days.

2.8 The referring and the referred law firm will agree the manner, form and extent to which information is communicated either directly or indirectly with the client.


LAWorld News

Payfoll Funding: How to stay ahead of the queue of creditors

An ever-present challenge facing financiers is how best to secure repayment of the money that they lend.  Traditionally, taking security over assets has been viewed as one of the best protections available.  However, through the use of “payroll funding”, it is possible for an otherwise unsecured lender to obtain for itself priority for repayment that can even outrank secured lenders.

The problem

Normally, if a borrower company becomes insolvent any net realisations from its “circulating” assets (which generally include inventory, debtors, and bank accounts) will be distributed firstly to employees for their wages and entitlements, then to secured creditors, and only then to ordinary unsecured creditors.

This means that a financier looking to provide new funding to a company, even if granted security, will normally rank behind employees and all existing secured creditors of that company.  This will often leave the new financier with too great a risk of non-payment to be able to provide funding, especially if the borrower is already in financial difficulty.

The opportunity – payroll funding

However, there is a way for financiers to jump to the head of the queue of creditors.  If a financier provides funding for the specific purpose of paying a borrower’s employees (pursuant to an appropriately-structured financing agreement), the financier will take over the priority of the employees paid using that funding.

This creates a mutually-beneficial opportunity.  The borrower can receive much-needed cash flow while the funder receives a right of repayment outranking not only ordinary unsecured creditors, but even outranking secured creditors to the extent of the company’s “circulating” assets.

Despite these benefits, payroll funding is still a largely untapped market in Australia, providing significant opportunities for financiers looking to expand their range of services, so long as they take care to obtain experienced legal advice regarding the structuring of their payroll funding agreements.

Stephen Polczynski, Managing Partner  Tel:  +61 (0)2 9234 1501     Email: spolczynski@plawyers.com.au

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Upcoming Events

LAWorld Annual Conference (Cape Town) from 5pm on Tuesday the 5th of April, 2016 to 2pm on Friday the 8th of April, 2016

Europe/Middle East Regional Meeting and Lawyers Next Generation (Bratislava) from 5pm on Friday the 5th of February, 2016 to 5pm on Saturday the 6th of February, 2016

North and South America Regional Meeting (Miami) from 6pm on Wednesday the 11th of November, 2015 to 2pm on Friday the 13th of November, 2015

Europe/Middle East Regional Meeting and Lawyers Next Generation (Milan) from 5pm on Friday the 18th of September, 2015 to 5pm on Saturday the 19th of September, 2015

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