1. Over the last few years I have written about four core inter-linked phrases, which can be summarised as:- too much law; too much complex law; law which is unenforceable; and law which is unenforced. To me, these phrases suggested among other things an absence of common sense in the corporate and commercial legal processes. They could apply to many areas of law; I am concentrating on business law.

 

  1. As part of my interest in these and related topics I gave a lecture at UCL Centre for Commercial Law, entitled “Common Sense – the Dark Matter of Business Law”.   Research for that paper included a survey of owner/managers of SMEs who produced comments such as:-

…a director of a small company is far too busy keeping his head above water to worry too much about regulations. I would say that the attitude towards all this is to ignore it, fear it, hope it goes away and hope you won’t be caught doing something you didn’t know was wrong in the first place. I would also say that most directors of small companies run their businesses using common sense and by hard work and a desire to make money, grow the business, employ the people and so on.   Regulation is a barrier to this”.

 

  1. My paper looked at the “disconnect” between (i) those who decide on the framework of rules and those who draft them, and (ii) the “users” of those rules. I wondered whether common sense could have any part to play in drafting legislation, because if people can’t or don’t (for whatever reason) understand the law, they might ignore it; they might also do the same if it makes no “sense”.   I also wondered about issues of legislation being micro-managed, resulting in an enormous piece of domestic legislation of particular concern to me (Companies Act 2006 and its dozens of accompanying statutory instruments).

 

4. I summarised my ideas follows:-

 

In respect of SMEs, as well as many other groups, there are far too many rules, most of which are too complex for their constituents to understand without costly assistance;

 

If laws are going to be passed there should be an acceptance that they will, whenever possible, be clear for their core constituents;

 

One size generally does not fit all companies/constituents and we should stop trying to draft laws as if it does;

 

Too often the wrong people appear to have been consulted during the discussion stages of the legislative process, when that process applies to smaller businesses;

 

Legislators should not try and micro-manage the regulations of every sort of business – some need it more than others;

 

If those who wish to encourage SMEs, and economic growth through that part of the private sector are serious about doing so, then not only do we need less complex legislation, we need appropriate legislation; and

 

If a halt to legislation is not possible, appropriate rules need to be introduced; in the case of some SMEs, a Smaller Companies (Companies) Act, about which more ideas to follow

 

It seems to me that there is a strong case for those teaching company law in its widest sense to become involved in this debate, to shape future regulation by broadening the views of practitioners.  I appreciate that some of these issues may not be within the direct scope of undergraduate law courses, but I believe that those teaching company law could assist by finding a way to introduce some of these issues.

 

It leads on to another area about which there will be more to follow if I can gather any enthusiasm. the breaking down of “ silos” !

 

Nick Gould

 

I had a go the other week at writing about Silos. I was gently reprimanded [ thanks DL] for not better explaining what Silos are. In this context the word Silo means ” a system or group or team, working in isolation from any other group or team “. I was disappointed at the few responses received because I really do think it is something worth thinking about; how to better share information which will in turn lead to greater understanding (and who knows what else), between my four Silos; practitioners,academics,Whitehall / Westminster and the end-users, in this case Small and Medium Sized Enterprises (SMEs). My one page paper on silos can be found here,I hope  — or in an earlier blog on this site http://t.co/myqrE8KtOG  Do have a look when you have a minute. Thanks.

This is another piece which sets out some of the areas I have written and lectured about in the past and which want to blog about when I get some time.There are, I reckon some good discussion subjects below — anyone have a view ?

As many know,several years ago I wrote a short paper about four core inter-linked phrases, which can be summarised as:- too much law; too much complex law; law which is unenforceable; and law which is unenforced.. These are now known ( by me at least ) as gould’s mantra. To me,these phrases suggested among other things an absence of common sense in the corporate and commercial legal processes.They could apply to many areas of law; I am concentrating on business law.

In 2011 I gave a lecture at UCL Centre for Commercial Law, entitled “Common Sense – the Dark Matter of Business Law”. Research for that paper included a survey of several owner /managers of SMEs who produced comments such as:-

…a director of a small company is far too busy keeping his head above water to worry too much about regulations. I would say that the attitude towards all this is to ignore it, fear it, hope it goes away and hope you won’t be caught doing something you didn’t know was wrong in the first place. I would also say that most directors of small companies run their businesses using common sense and by hard work and a desire to make money, grow the business, employ the people and so on. Regulation is a barrier to this”.

My paper looked at the “disconnect” between (i) those who decide on the framework of rules and those who draft them, and (ii) the “users” of those rules. I wondered whether common sense could have any part to play in drafting legislation, because if people can’t or don’t (for whatever reason) understand the law, they might ignore it; they might also do the same if it makes no “sense”. I also wondered about issues of legislation being micro-managed, resulting in an enormous piece of domestic legislation of particular concern to me (Companies Act 2006 and its dozens of accompanying statutory instruments).

I summarised some of  my ideas as follows:-

In respect of SMEs, as well as many other groups, there are far too many rules, most of which are too complex for their constituents to understand without costly assistance;

If laws are going to be passed there should be an acceptance that they will, whenever possible, be clear for their core constituents;

One size generally does not fit all companies/constituents and we should stop trying to draft laws as if it does;

Too often the wrong people appear to have been consulted during the discussion stages of the legislative process, when that process applies to smaller businesses;

Legislators should not try to micro-manage the regulations of every sort of business – some need it more than others;

If those who wish to encourage SMEs, and economic growth through that part of the private sector are serious about doing so, then not only do we need less complex legislation, we need appropriate legislation; and

If a halt to legislation is not possible, appropriate rules need to be introduced; in the case of some SMEs, a Smaller Companies (Companies) Act.

It seems to me that there is a strong case for those teaching company law in its widest sense to become involved in this debate, to shape future regulation by broadening the views of practitioners.

I appreciate that not all of these issues may not be within the direct scope of undergraduate law courses, but I believe that those teaching company law would greatly benefit their students by finding a way to introduce some at least.

Real examples

As promised in my first post, here are some real examples as suggested by clients which go straight to the heart of issues raised by the Good Law Initiative.

The Auto Enrolment for pensions is a nightmare. How the Government can shift the emphasis of this traditionally state run function to the private sector is shocking. The cost to our tiny [about 90 employees] business will be £25,000 in pension contributions but the cost of implementation will be many times that . We have to opt them in to opt them out.  I have a foreign workforce – they won’t even understand pensions so that’s another cost (interpreters).

And

The law relating to eligibility for criminal records check is enormously and unnecessarily complex and inaccessible. There are three levels of criminal record check including Standard Disclosure. The relevant Order was amended just once in the years between 1975 and 2001. Since 2001 the English and Welsh version of the Order has been amended by thirteen different statutory instruments.

Perfect examples of an inability by those who produce laws to understand the effects of continuous amendments (whether necessary or not is not the point here) on the end users. Any of the taxation laws could be used as an example here.

A connected point is the real difficulty of end users, most of whom have no legal training, to access the relevant rules. A so called rolling process of trying to “ fix “ things, for whatever reason by introducing ever more rules, is never helpful.

What is the effect of “bad law”?

With the added responsibility of ensuring, employment, health and safety and compliance law et al is adhered to, the twenty- something entrepreneur is looking the other way This leaves him and his company open to action from the government, disgruntled employees and the taxman as well as attack from bigger established organisations.

This ostrich approach ‘I can’t deal with all this stuff, so I will pretend it doesn’t exist’ brings the law into disrepute.

Often people don’t believe that there is a real reason (rather than a “something must be done reason”) behind the rules. As one client suggested

…and dare I say it, my very strong suspicion is that the legislation has caused a large proportion of compliance work to become  a box ticking task [ and here we only really need to mention as a group “ the banks and the regulators ” , to understand the disastrous effects when regulations are reduced to box-ticking ] with no real thought as to what they are trying to do; good old professionalism is a far more productive way to identify potential  problems

What is the true reason for of all this law?

Many people would suggest it is how the politicians prove their “worth or value”. Although perhaps more thought and less rules might be a better option.

Micro–managing the laws relating to business will continue to put a massive financial burden on SMEs and their owners / managers. Laws relating to business should not assume everyone or even most people are “bad”. The bad guys will break the rules anyway and probably, get away with it!

This was never intended to start as a cry for common sense in and throughout the legislative process … perhaps it should have been.

Good law Initiative

The Good Law Initiative (GLI) has come out of the vision of the Office of the Parliamentary Counsel (OPC). It would like people who use the law to experience so called good law (wouldn’t we all). We need law that is:-

  • Necessary
  • Clear
  • Coherent
  • Effective
  • Accessible

My Involvement

OPC asked people in government, in parliament, as well as people in the world of business to think about good law. I am a corporate lawyer who has been writing and lecturing on these issues for some time.

As part of my involvement in this project I was asked to say something to a group from the Cabinet Office about the problem of volume and complexity of law (and resulting issues of lack of compliance and enforcement) from the perspective of real life users.

My Approach

My basic mantra is as follows, and it applies to just about every part of the legal system. I believe we have:-

  • Too much law
  • Too much bad/complex law
  • Laws which are unenforceable
  • Laws which are unenforced

The Target

This initiative has small and medium sized companies in mind.

In my opinion, what often tends to be missing from these discussions is feedback from the 99 per cent of these businesses.

There are over 4 million SMEs, employing up to 249 people, and make up about 48 per cent of private sector turnover and employ over 13 million people. They are an extremely important part of the economy, and as such should be rewarded with a voice on matters which affect them.

Further Information

In my next post I will offer a couple of examples from clients which go to the heart of issues raised by this initiative.