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29 July 2016

"If you can't stand the heat, get out of the kitchen".

The well-known phrase, designed to prevent individuals becoming embroiled in a position which carries too much pressure for their liking.

There are those who believe that the wording can be easily applied to business, ensuring that people stay within the limits of their talent, comfort and capabilities.

There are few instances when the metaphor mixes with the very literal and fewer still when the tensions created by such a situation have a considerable impact not just on a firm but also a family. One such high-profile example hit the news in January 2015, involving a well-known chef who now faces a considerable cost as a result of a dispute with his father-in-law over a restaurant lease.

The High Court dismissed Mr Ramsay’s claim that he had been duped into paying £640,000-a-year rent for a London gastro pub. Ramsay alleged that Mr Hutcheson had unlawfully used a machine which automatically reproduced a copy of the celebrity's handwriting to 'sign' the lease.

As a result, Mr Ramsay will now have to pay £10.8 million over the course of the remaining 17 years of the 25-year lease as well as £1.6 million in outstanding rent and legal fees to date. The dispute had already seen Mr Hutcheson leave as chief executive of Gordon Ramsay Holdings. Mr Hutcheson's daughter, Tana, had also given evidence in court against her father and brother.

Not all litigation involving families have such a value or a profile attached to them. Nevertheless, there is a lot of common ground between Mr Ramsay's predicament and that of many other entrepreneurs who do business with relatives and end up seeking my advice when difficulties arise.

For me, embarking on a business venture with family members should be even more reason to ensure that all agreements are properly documented. The same can be said when going into business with colleagues or close friends. As unfair as that might sound, it avoids the temptation to cut corners just because you're dealing with someone you know.

Courts and competitors will give companies no more leeway because there are blood ties between the people running them. My team and I have encountered many problems between siblings, parents and their children, and spouses arising from business ventures between them.  My advice is clear; when going into business with a family member, take advice on the structure, purpose and intentions of all parties, and document it carefully. Hopefully you’ll never need to look at it again, but in case you do, you’ll avoid a lot of heartache.  

As Gordon Ramsay can now attest, investing in a family business does not necessarily create the perfect recipe. 

 

 

Contact Oratto on 0845 3883765 to speak with an adviser or use our contact form to arrange a call-back.

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20 July 2016

In advance of the recent international anti-corruption summit in London, substantial amounts of press coverage were devoted to David Cameron’s faux pas in referring to some of the “fantastically corrupt” countries in attendance. Significantly less publicity was given to the Prime Minister’s announcements at the summit itself, including one which has potentially wide reaching implications for those who use corporate vehicles to own and purchase property in the UK.

The government recently announced that the UK was to be the first G20 country to implement a publicly accessible register of beneficial owners of companies and other corporate entities – beneficial owners being the individuals who ultimately sit behind often complex corporate structures and enjoy the benefit of assets owned by the company. At the summit the Prime Minister went further by announcing that offshore shell companies and other foreign corporate entities that buy or own British property will similarly be obliged to declare their beneficial ownership. The proposal may go some way in addressing concerns that some high-value properties, particularly in London, are being purchased with ill-gotten funds to facilitate money laundering. It is intended that the transparency obligations will extend to companies and other entities which currently own UK property, not just those that purchase in future, such that the ownership details of tens of thousands of people will soon become public. The government is also consulting on reversing the burden of proof, such that if there are suspicions of UK property being purchased with illicit funds, it will be incumbent upon the owner to demonstrate that the property was purchased with legitimate funds or risk being stripped of the property.

The Prime Minister has announced that a handful of other countries will make the same commitment and presumably hopes that others will follow suit. However, he has already faced criticism of his inability to persuade British dependencies, including the Cayman and British Virgin Islands to sign up to the transparency scheme. Critics have voiced concerns that these and other territories already have robust anti-corruption practices, albeit even if information is not made publicly available, and that a move to make such information more transparent risks driving legitimate business activity into non-compliant and less well-regulated jurisdictions. The property market is already showing signs of slowing in London and it is feared that the anti-corruption rules risk further driving down demand from legitimate business persons, who may have their own reasons for privacy. Others argue that, conversely, the rules will enhance demand by creating a perception of the UK property market as a safe and clean place to do business.

It remains to be seen how far reaching the anti-corruption practices will ultimately be and what impact, if any, they will have on the market.

 

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24 June 2016

On Thursday 23 June, the eight-day trial concerning the alleged copyright infringement by Led Zeppelin concluded as the jury ruled that the iconic guitar riff intro of the band's classic track "Stairway to Heaven" was their own composition and not taken from the song "Taurus" by Spirit, released four years beforehand.

Although it was acknowledged that both Robert Plant and Jimmy Page, lead singer and guitarist of Led Zeppelin respectively, had access to the lesser known song before writing Stairway, the jury failed to see enough similarities between the two compositions to justify the charge of plagiarism.

21 June 2016

The 1960's US rock band Spirit is suing members of the seminal British rock band Led Zeppelin for copyright infringement of their most famous hit "Stairway to Heaven" and an injunction against the release of album Led Zeppelin IV which features the track.

It is alleged that the opening instrumental of "Stairway to Heaven" was incorporated into the song after Led Zeppelin heard Spirit's song "Taurus" whilst the bands toured together between 1968 and 1969.

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