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Commercial Awareness Update - May 2020
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<blockquote data-quote="Jaysen" data-source="post: 29652" data-attributes="member: 1"><p><strong><em></em></strong></p><p><strong><em>Drive for Jaguar Land Rover to Secure Support Package</em></strong></p><p></p><p>By [USER=201]@Flora R[/USER] </p><p></p><p><u><strong>The Story</strong></u></p><p></p><p>It has been announced that Jaguar Land Rover (‘JLR’) has entered talks with the UK government to receive a £1bn loan, the largest sought during the COVID-19 crisis, to date. JLR has publicly stated that the pandemic has significantly impacted the company, causing the closure of facilities at the end of March and a more than 30% fall in Q4 sales. </p><p></p><p>Additionally, rating agency, Standard & Poor, recently downgraded JLR’s rating and estimated the company is losing £1bn a month. The carmaker are unable to secure financial support through the government’s Covid Corporate Financing Facility, aimed at supporting liquidity of larger businesses, as their credit rating does not meet the “investment grade” rating required – this rating shows a company’s credit worthiness and weighs up the risk of defaulting on repayments. JLR are deemed excessively risky for state-backed funding. However, the carmaker is already receiving some financial relief from the government, as 20,000 of their 38,000 staff are currently being paid under the furlough scheme.</p><p></p><p><u><strong>What It Means For Businesses and Law Firms</strong></u></p><p></p><p>The automotive industry on the whole has been hit hard by the pandemic; in April, new car registrations hit their lowest monthly level since 1946. The Society for Motor Manufacturers and Traders estimated there will be only 1.68m new car registrations in 2020, compared to 2.3m last year. Pre-crisis, the car industry was already experiencing difficulties and struggling with the decreased demand for diesel vehicles and the costs of meeting new emissions targets.</p><p></p><p>As JLR is the UK’s largest carmaker, it will be interesting to see how the government handles this request and the response may reflect their willingness to support other carmakers in financial difficulty. Several UK carmakers have similarly been affected by the present crisis; Aston Martin recently suffered a 94% decline in share price. Likewise, McLaren was forced to cut 1,200 jobs last week due to a decline in order numbers. Yesterday, France unveiled a US$8.8bn plan to save their ailing car industry; it seems unlikely that the UK government will allow this key sector to collapse.</p><p></p><p>If a deal is agreed, the government may provide JLR with a loan in return for equity in the company. This would echo the approach taken by other European countries, including France and Germany; both governments provided loans in exchange for significant equity stakes in their largest carmakers. Renault’s €5bn rescue deal was also dependent upon the preservation of jobs and factories in France. Such a move would make strategic sense for the UK government, given legislators had existing plans to ramp up the UK automotive sector post-Brexit, and JLR is an attractive funding recipient, given their plans to invest £4bn on UK research and development.</p><p></p><p><strong><em>Failing to Tap into Cybersecurity: easyJet Pays the Price</em></strong></p><p></p><p>By [USER=4861]@Lauren2[/USER] </p><p></p><p><u><strong>The Story</strong></u></p><p></p><p>Last week, easyJet announced that the airline had fallen victim to a major cybersecurity attack. The personal details of around 9m customers, including 2,208 customers’ credit card details were obtained by hackers, in a breach which they became aware of in January.</p><p></p><p>Following an internal investigation, easyJet confirmed it was possible to close off hackers’ unauthorised access to their systems and insisted there was <em>"no evidence that any personal information of any nature has been misused"</em>. Despite this, on 26th May it was announced that a class-action lawsuit worth £18m had been filed at the High Court on behalf of affected customers.</p><p></p><p><u><strong>What It Means For Businesses and Law Firms</strong></u></p><p></p><p>The airline industry has become a prime target for data breaches, given the plethora of sensitive information they hold for customers, including contact details, passport information, personal travel plans and payment methods. Airlines Cathay Pacific and British Airways have also fallen victim to large-scale attacks in recent years.</p><p></p><p>IBM found that the average time taken to detect a data breach is 206 days – significant damage can occur in this time. The after-effects of data breaches are both reputational and financial. Consumer confidence in the airline industry is already at an all-time low and this breach will truly put confidence in easyJet to the test. A 2018 survey found that 41% of consumers would not return to a business which has experienced a security breach or hack (PCI Pal).</p><p></p><p>Data breaches also have severe financial repercussions. On top of the class-action lawsuit, experts have predicted that the Information Commissioner's Office (ICO) will likely issue a heavy penalty. If the ICO’s investigations reveal that easyJet failed to take the appropriate data protection measures, the company may be fined up to 4% of its annual turnover. The owner of British Airways, IAG, received a record £183m fine for a similar breach involving 500,000 customers’ data in 2018.</p><p></p><p>Cyberattacks represent an increasing threat, with easyJet’s Chief Executive Officer, Johan Lundgren, acknowledging an <em>“evolving threat as cyberattackers get ever more sophisticated”, </em>which is making it both more difficult and costly for companies to secure data. A recent EY Global Information Security Survey found that two thirds of companies fail to consider cybersecurity and subsequently do not implement ways of combatting threats at an early stage. EY identified the core issue is that senior management are often out-of-touch with the work of cybersecurity teams and fail to understand and appreciate the cybersecurity risks associated with new technology ventures.</p><p></p><p>Given the increase in remote working has accelerated the pace at which many law firms and other businesses are digitalising their operations, with many undertaking new technology and innovation projects, cybersecurity should be a high priority. Lawyers are likely to experience increased demand for cybersecurity and cybercrime advice, especially as many clients may be ‘spooked’ by the current fallout easyJet is experiencing.</p><p></p><p>Cybersecurity is a distinct and emerging legal specialism and in future, there will be a greater need for lawyers with technical understanding and expertise in this area, given increased digitalisation and the associated financial repercussions of companies making a wrong move in this area.</p><p></p><p>It remains to be seen whether the group litigation will be successful; it could signal a new trend in cases of data breaches and litigators may increasingly find themselves defending clients against high-value class-actions brought by affected customers.</p><p></p><p><strong><u>Law Firms in the COVID-19 crisis</u></strong></p><p></p><p><strong>Osborne Clarke</strong> made further reductions to partner and staff salaries this week. Staff pay will be reduced by 7% and 75% of partners profit distributions have been deferred. The measures will be in place from June and are anticipated to last for 11 months (The Lawyer).</p><p></p><p><strong>BCLP</strong> and <strong>Norton Rose Fulbright</strong> have both set out plans for phased returns to their London offices. <strong>NRF</strong> surveyed staff on their views towards returning to the workplace; the majority of respondents were found to prefer working remotely “<em>most of the time</em>” and only 12% felt “<em>very relaxed</em>” about returning to the office. The firm has planned a gradual, phased return to work, involving the implementation of social distancing arrangements, provision of face masks and temperature testing for staff. The firm plans to avoid face-to-face meetings and business travel for the foreseeable future (The Lawyer).</p><p></p><p><strong>BCLP </strong>assembled a UK ‘back to work taskforce’ which has set out a ‘five stage plan’ to return staff to their offices. The phases gradually increase the number of staff permitted to return to work, involving an initial rota to limit the number of staff at any one time. The rotas will gradually increase the number of staff brought back and the later stages envision a “new normal” which implements social distancing measures in the workplace (The Lawyer).</p><p></p><p><strong><em>‘Business as usual’ </em></strong><em>– the deals which went ahead as usual this week:</em></p><ul> <li data-xf-list-type="ul">Eversheds and Ashurst were instructed to act on the <strong>rescue deal to save financially distressed Italian restaurateurs, Carluccio’s</strong>. Boparan Restaurant Group are purchasing the chain out of administration. The deal saves 31 stores and 800 jobs; however, 40 other sites will be closed by Carluccio’s administrators, FRP Advisory.</li> </ul> <ul> <li data-xf-list-type="ul">DLA Piper and JMW are on call to advise the <strong>English Premier League’s “Project Restart” to test footballers for coronavirus</strong>, as part of plans to allow footballers to return to restricted training sessions. The Premier League are a long-standing client of DLA and the firm is also advising on their provision of emergency loans to several football clubs.</li> </ul></blockquote><p></p>
[QUOTE="Jaysen, post: 29652, member: 1"] [B][I] Drive for Jaguar Land Rover to Secure Support Package[/I][/B] By [USER=201]@Flora R[/USER] [U][B]The Story[/B][/U] It has been announced that Jaguar Land Rover (‘JLR’) has entered talks with the UK government to receive a £1bn loan, the largest sought during the COVID-19 crisis, to date. JLR has publicly stated that the pandemic has significantly impacted the company, causing the closure of facilities at the end of March and a more than 30% fall in Q4 sales. Additionally, rating agency, Standard & Poor, recently downgraded JLR’s rating and estimated the company is losing £1bn a month. The carmaker are unable to secure financial support through the government’s Covid Corporate Financing Facility, aimed at supporting liquidity of larger businesses, as their credit rating does not meet the “investment grade” rating required – this rating shows a company’s credit worthiness and weighs up the risk of defaulting on repayments. JLR are deemed excessively risky for state-backed funding. However, the carmaker is already receiving some financial relief from the government, as 20,000 of their 38,000 staff are currently being paid under the furlough scheme. [U][B]What It Means For Businesses and Law Firms[/B][/U] The automotive industry on the whole has been hit hard by the pandemic; in April, new car registrations hit their lowest monthly level since 1946. The Society for Motor Manufacturers and Traders estimated there will be only 1.68m new car registrations in 2020, compared to 2.3m last year. Pre-crisis, the car industry was already experiencing difficulties and struggling with the decreased demand for diesel vehicles and the costs of meeting new emissions targets. As JLR is the UK’s largest carmaker, it will be interesting to see how the government handles this request and the response may reflect their willingness to support other carmakers in financial difficulty. Several UK carmakers have similarly been affected by the present crisis; Aston Martin recently suffered a 94% decline in share price. Likewise, McLaren was forced to cut 1,200 jobs last week due to a decline in order numbers. Yesterday, France unveiled a US$8.8bn plan to save their ailing car industry; it seems unlikely that the UK government will allow this key sector to collapse. If a deal is agreed, the government may provide JLR with a loan in return for equity in the company. This would echo the approach taken by other European countries, including France and Germany; both governments provided loans in exchange for significant equity stakes in their largest carmakers. Renault’s €5bn rescue deal was also dependent upon the preservation of jobs and factories in France. Such a move would make strategic sense for the UK government, given legislators had existing plans to ramp up the UK automotive sector post-Brexit, and JLR is an attractive funding recipient, given their plans to invest £4bn on UK research and development. [B][I]Failing to Tap into Cybersecurity: easyJet Pays the Price[/I][/B] By [USER=4861]@Lauren2[/USER] [U][B]The Story[/B][/U] Last week, easyJet announced that the airline had fallen victim to a major cybersecurity attack. The personal details of around 9m customers, including 2,208 customers’ credit card details were obtained by hackers, in a breach which they became aware of in January. Following an internal investigation, easyJet confirmed it was possible to close off hackers’ unauthorised access to their systems and insisted there was [I]"no evidence that any personal information of any nature has been misused"[/I]. Despite this, on 26th May it was announced that a class-action lawsuit worth £18m had been filed at the High Court on behalf of affected customers. [U][B]What It Means For Businesses and Law Firms[/B][/U] The airline industry has become a prime target for data breaches, given the plethora of sensitive information they hold for customers, including contact details, passport information, personal travel plans and payment methods. Airlines Cathay Pacific and British Airways have also fallen victim to large-scale attacks in recent years. IBM found that the average time taken to detect a data breach is 206 days – significant damage can occur in this time. The after-effects of data breaches are both reputational and financial. Consumer confidence in the airline industry is already at an all-time low and this breach will truly put confidence in easyJet to the test. A 2018 survey found that 41% of consumers would not return to a business which has experienced a security breach or hack (PCI Pal). Data breaches also have severe financial repercussions. On top of the class-action lawsuit, experts have predicted that the Information Commissioner's Office (ICO) will likely issue a heavy penalty. If the ICO’s investigations reveal that easyJet failed to take the appropriate data protection measures, the company may be fined up to 4% of its annual turnover. The owner of British Airways, IAG, received a record £183m fine for a similar breach involving 500,000 customers’ data in 2018. Cyberattacks represent an increasing threat, with easyJet’s Chief Executive Officer, Johan Lundgren, acknowledging an [I]“evolving threat as cyberattackers get ever more sophisticated”, [/I]which is making it both more difficult and costly for companies to secure data. A recent EY Global Information Security Survey found that two thirds of companies fail to consider cybersecurity and subsequently do not implement ways of combatting threats at an early stage. EY identified the core issue is that senior management are often out-of-touch with the work of cybersecurity teams and fail to understand and appreciate the cybersecurity risks associated with new technology ventures. Given the increase in remote working has accelerated the pace at which many law firms and other businesses are digitalising their operations, with many undertaking new technology and innovation projects, cybersecurity should be a high priority. Lawyers are likely to experience increased demand for cybersecurity and cybercrime advice, especially as many clients may be ‘spooked’ by the current fallout easyJet is experiencing. Cybersecurity is a distinct and emerging legal specialism and in future, there will be a greater need for lawyers with technical understanding and expertise in this area, given increased digitalisation and the associated financial repercussions of companies making a wrong move in this area. It remains to be seen whether the group litigation will be successful; it could signal a new trend in cases of data breaches and litigators may increasingly find themselves defending clients against high-value class-actions brought by affected customers. [B][U]Law Firms in the COVID-19 crisis[/U][/B] [B]Osborne Clarke[/B] made further reductions to partner and staff salaries this week. Staff pay will be reduced by 7% and 75% of partners profit distributions have been deferred. The measures will be in place from June and are anticipated to last for 11 months (The Lawyer). [B]BCLP[/B] and [B]Norton Rose Fulbright[/B] have both set out plans for phased returns to their London offices. [B]NRF[/B] surveyed staff on their views towards returning to the workplace; the majority of respondents were found to prefer working remotely “[I]most of the time[/I]” and only 12% felt “[I]very relaxed[/I]” about returning to the office. The firm has planned a gradual, phased return to work, involving the implementation of social distancing arrangements, provision of face masks and temperature testing for staff. The firm plans to avoid face-to-face meetings and business travel for the foreseeable future (The Lawyer). [B]BCLP [/B]assembled a UK ‘back to work taskforce’ which has set out a ‘five stage plan’ to return staff to their offices. The phases gradually increase the number of staff permitted to return to work, involving an initial rota to limit the number of staff at any one time. The rotas will gradually increase the number of staff brought back and the later stages envision a “new normal” which implements social distancing measures in the workplace (The Lawyer). [B][I]‘Business as usual’ [/I][/B][I]– the deals which went ahead as usual this week:[/I] [LIST] [*]Eversheds and Ashurst were instructed to act on the [B]rescue deal to save financially distressed Italian restaurateurs, Carluccio’s[/B]. Boparan Restaurant Group are purchasing the chain out of administration. The deal saves 31 stores and 800 jobs; however, 40 other sites will be closed by Carluccio’s administrators, FRP Advisory. [/LIST] [LIST] [*]DLA Piper and JMW are on call to advise the [B]English Premier League’s “Project Restart” to test footballers for coronavirus[/B], as part of plans to allow footballers to return to restricted training sessions. The Premier League are a long-standing client of DLA and the firm is also advising on their provision of emergency loans to several football clubs. [/LIST] [/QUOTE]
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