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A brief guide to the different types of cryptoassets

Posted on: September 20th, 2023 by AlexT

It is a common misconception that the existence of cryptoassets was ushered in by the arrival of Bitcoin in 2009. In reality, the concept of digital or cryptographic currencies significantly predates Bitcoin, and there were several attempts to create a digital, decentralised form of currency before Bitcoin, for example eCash and HashCash. However, whilst Bitcoin was not the first attempt at a cryptocurrency, it was the one that solved certain key issues, such as double spending and decentralisation, more effectively than its predecessors. In this sense, it was undoubtedly the cryptocurrency that propelled cryptoassets into mainstream recognition.

Since the introduction of Bitcoin, the world of cryptoassets has grown exponentially, and the market now consists of tens of thousands of different cryptoassets, each with their own functionalities, supposed use cases, and legal implications.

Are coins the same as tokens?

From a legal and regulatory perspective, the terms coins and tokens can and are used interchangeably in relation to cryptoassets, and both terms essentially have the same meaning when used in this context.

However, in cryptocentric terms, Coins and Tokens have very different meanings.

Coins are usually used to refer to those cryptoassets which act as native cryptoassets to their own blockchain. For example, Bitcoin on the Bitcoin blockchain, or Ether on the Ethereum blockchain. Coins are usually intended to function as a digital store of value or medium of exchange.

Tokens, on the other hand, are cryptoassets that operate on an existing blockchain network instead of their own. Whilst tokens can also be used in a similar fashion to coins, they are often created to fulfil different purposes to coins, for example to raise funds or give access to particular services. Some examples of tokens include Shiba Inu, Tether, and Basic Attention Token.

So, whilst most of the regulatory language in the UK refers to “tokens”, it should be remembered that this is not a reference to the crypto specific definition of a token, and is essentially used as a technologically neutral term in a legal and regulatory context.

Altcoins and memecoins

An altcoin is simply a designation given to any cryptoassets which is not Bitcoin (and arguably Ether).

Many altcoins are designed to be used for a specific purpose or to address limitations and innovate upon existing blockchains. One of the first altcoins was Litecoin, which was forked (or simply put, an offshoot) from the Bitcoin blockchain, and offers faster transaction times than Bitcoin.

Memecoins are another subset of cryptoassets that often originate from an internet meme or joke, yet can attract serious following and price appreciation.

Memecoins often do not aim for any specific functionality or utility, and primarily gather attention through social media, viral marketing and online community engagement. They represent a fascinating microcosm within the cryptoassets world and can sometimes evolve into more refined projects with defined aims and utilities.

An example of a memecoin is Dogecoin, which experienced significant growth in a relatively short period of time, reaching a value of $0.68c at its all time high in May 2021, meaning it had a market cap of around $88 billion.

Stablecoins

Despite the name, most stablecoins are usually tokens utilising existing blockchains – another quirk of usual crypto lexicon!

One of the endemic characteristics of cryptoassets is that they are extremely volatile, and while this volatility can be beneficial, it is one of the characteristics that makes cryptoassets unsuitable as a medium of exchange or store of value. Stablecoins exist to address the problem of volatility by pegging their value to an external reference, for example a commodity such as gold, or a fiat currency such as the US dollar.

Whilst all stablecoins maintain their value by some external reference, there are different types of stablecoins.

Some stablecoins are said to be fiat-collateralised – in other words, they are said to be backed one-to-one by reserves of fiat currency. An example of such a stablecoin would be USDC. For every USDC token in existence, there is an equivalent amount of fiat US dollar held in reserve.

Other stablecoins are crypto-collateralised and so they are backed by a reserve of other cryptoassets. They utilise smart contracts that automatically adjust the collateral to maintain a stable value. An example of one such stablecoin is DAI.

Some stablecoins are commodity-collateralised and reference the value of a physical commodity such as gold or silver and aim to maintain a peg to that value. For example, Tether Gold is said to be collateralised to gold.

There also exists stablecoins that are not backed by any collateral at all but aim to use algorithms to control their supply and demand and maintain a stable value. There has been increasing criticism of algorithmic stablecoins, particularly since the collapse of Luna and Terra USD in May 2022.

It is a noteworthy point that many jurisdictions are developing central bank digital currencies (CBDC’s) and some have already been implemented such as the eNaira in Nigeria. They are digital, similar to cryptoassets, and their value tends to be fixed to their country’s fiat currency much like a stablecoin. However, CBDC’s should not be confused with cryptoassets, particularly as CBDC’s are controlled by a central bank or monetary authority, while cryptoassets are typically decentralised.

Governance tokens

Governance Tokens are a type of cryptoasset that allows holders to vote on decisions related to a particular platform or protocol. They act as a bridge between platform creators and the community of users and allow for an element of democratisation.

Examples of governance tokens include the maker token (MKR), issued by MakerDAO. One MKR token is equivalent to one vote, and token holders vote on several issues including appointing team members and modifying fees.

Fan tokens

Fan tokens are another form of cryptoasset that, in essence, represents membership of a fan club of a particular sports team, artist or celebrity. They often allow their holders to access fan membership perks such as voting on decisions, merchandise designs and rewards. They also often grant holders access to privileges such as exclusive content and ticketing privileges.

Football clubs such as FC Barcelona, Manchester City and PSG each have dedicated fan tokens.

Non-fungible tokens (NFT’s)

Non-fungible tokens (NFTs) are a form of cryptoasset that represents ownership or proof of authenticity of a unique item or piece of content. They are best thought of as assets that have been tokenised via a blockchain, and they are inherently unique in themselves, such that they are not interchangeable.

For example, a particular ETH coin is essentially no different to another ETH coin, and so they are interchangeable on a one-to-one basis. However, comparing two NFT’s, even though they may look the same will have independent and unique characteristics.

NFT’s can be used to tokenise a wide variety of assets from art and music, to real estate and event tickets.

Popular examples of NFTs include the Bored Apes Yacht Club collection and Cryptopunks.

The legal definition of cryptoassets that has been adopted in the UK includes NFTs, and this allows for them to be interpreted within the same framework as other cryptoassets which are deemed to constitute property. From a regulatory perspective, an NFT can be unregulated or regulated depending on the rights and obligations that attach to the NFT.

The High Court in England has already demonstrated its forward-thinking approach by allowing the service of legal documents via NFTs. As well as highlighting the flexibility of NFTs, this also highlights the English judicial system’s openness to integrate emerging technologies into practice.

Tokenised Real-world Assets

Another growing subset of assets within cryptoassets are tokenised assets that represent a share in a real-world asset, such as real estate, a luxury watch or handbag, vintage cars, and art. These usually utilise NFTs and allow for expensive assets to be broken down into smaller, easily traded units.

The legal and regulatory treatment for these can be complex and very much depend on the nature of the underlying asset which the token represents.

Conclusion

The landscape of cryptoassets is diverse and ever evolving, encompassing a range of asset types, many of which fall into one or more of the above categories.

Understanding and appreciating the legal intricacies of these various assets is imperative for both individual and institutional participants in this rapidly growing sector. As a UK-based law firm with a particular specialism in cryptoassets, Lawrence Stephens is uniquely positioned to provide expert guidance and innovative solutions to investors, creators and holders alike.

Please do not hesitate to contact our team who will be happy to discuss and identify your needs.

Lawrence Stephens completes the sale of Heath Crawford & Foster Holdings Limited

Posted on: September 15th, 2023 by Natasha Cox

Lawrence Stephens acted on behalf of the shareholders of the Heath Crawford and Foster Group in a complex transaction to complete the sale of Heath Crawford & Foster Holdings Limited including its subsidiaries, Heath Crawford & Foster,  ABA Insurance and Merenda & Co Limited  to The Clear Group, the award winning and leading insurance group.

Heath Crawford & Foster was founded in 1982 by Paul Weinberg, who will continue with his team to drive forward its growth strategy under The Clear Group umbrella. The acquisition is a continuation of The Clear Group’s long-term consolidation strategy to build a balanced and sustainable business.

The deal was led by Lawrence Stephen’s Director and Head of Corporate and Commercial, Jeff Rubenstein, with support from Associates, Charlotte Hamilton and Aashay Knights, Solicitors, Isobel Moran, Lucy Cadley and Carla Bernstein, and with property aspects being handled by Director, Nick Marshall. As a full service law firm this deal highlighted the effort across the Corporate and Property teams at Lawrence Stephens that enabled this complex transaction to come to an efficient completion.

Jeff Rubenstein comments on the deal: “Having met Paul Weinberg many years ago, I was delighted that we were chosen to represent Paul and his team on a deal which I am convinced will strengthen the trajectory of The Clear Group’s consolidation plans and broader offerings. This transaction strengthens our position as lawyers who have an in-depth knowledge and expertise acting for owner managers in the financial services and insurance broker market.

We were delighted by the collaborative nature of all involved both from The Clear Group and its external legal  advisors in showing a  willingness to get the deal done.”

Paul Weinberg comments on the deal: “Jeff and the team at Lawrence Stephens provided clear and sensible legal and commercial advice throughout. When things became more complex, they were able to address each aspect of the deal. They displayed patience, creativity and resilience whilst at the same time kept up the momentum to get the deal across the line. We were delighted to have them by our side.”

What are cryptoassets and how are they regulated?

Posted on: September 14th, 2023 by AlexT

In the age of the Digital Revolution, terms such as ‘cryptoassets’, ‘cryptocurrency’, ‘tokens’, and ‘blockchain’ have become increasingly common in everyday conversations, as well as in financial, technological, and legal discourse. Despite their growing presence, adoption and relevance, misconceptions and ambiguity continue to surround this novel asset class.

Perhaps these misconceptions and ambiguity can be explained by the nuances in the terminology, which often amalgamate traditional financial and technological terms.

The terms ‘cryptoassets’, ‘cryptocurrency’, and ‘cryptotokens’ are often used interchangeably, yet each has its own specific implications and considerations.

Whilst ‘cryptocurrency’ is perhaps the most commonly recognised catch-all term for this group of assets, it is somewhat of a misnomer as they do not possess all of the properties of a traditional currency (also called ‘fiat currency).

Fiat currencies are typically used as a medium of exchange for goods and services. They can also be used as a store of value and as a unit of account. They are most often issued by central banks or monetary authorities.

In contrast, cryptocurrencies are not yet widely accepted as a medium of exchange, and their inherent volatility makes them unsuitable as a unit of account. Cryptocurrencies are said to be ‘decentralised’ as they are not issued by or subject to governments, central banks or monetary authorities. However, a point should be made to contrast this with Central Bank Digital Currencies (CBDC’s), which are digital forms of fiat currency issued by central banks, and are often mentioned in the same discourse as cryptocurrencies.

For these reasons, the term ‘cryptoassets’ is a more accurate catch-all term that we choose to adopt.

What are Cryptoassets?

Essentially, they are digital assets that use cryptography for security, and utilise a form of distributed ledger technology, such as a blockchain, to record and store transactions. The wide definition of ‘cryptoasset’ adopted in the UK also encompasses cryptoassets such as NFT’s.

Blockchain is the underlying technology that enables the secure and decentralised functioning of cryptoassets. A blockchain is a type of digital ledger that is distributed across a network of computers known as nodes, where no one single entity has control of the data.

Each block contains a list of transactions which are cryptographically linked to the previous block, which functions to create a secure and immutable record of transactions.

The decentralisation aspect of cryptoassets is one of their most appealing design features. It means that they are not subject to governmental or monetary policy interference, nor are they susceptible to any single point of failure, and it also enables a number of use cases for cryptoassets.

Popular and well-known cryptoassets include Bitcoin, Litecoin, Ether, and Cardano, although there are now tens of thousands of cryptoassets in existence.

Treatment of Cryptoassets in the UK

As the adoption of cryptoassets continues to grow, they have presented novel and unique challenges to governments, monetary bodies, and international regulators. One of the main challenges in regulating cryptoassets is that they are global in nature and exist without borders. As such, different national regulators have taken inconsistent approaches towards their treatment of cryptoassets, and it is very much a sector that is in a near-constant state of regulatory and legislative flux.

Cryptoassets are not subject to any blanket prohibition or ban in the UK, in contrast to what has been seen in other parts of the world such as China. Rather, the UK government and regulators have openly recognised the substantial benefit and use cases of cryptoassets and blockchain technology, which has made the UK a ‘friendly’ jurisdiction for start-ups and established companies alike, looking to develop, create, implement, and explore this space.

Aside from an outright ban on the marketing, distribution or sale of crypto-derivative products to retain consumers, there are no specific prohibitions on the use, purchase or trading of cryptoassets in the UK.

The legal status of cryptoassets in the UK is that they are treated and viewed as property. While there is continuing academic and legal discussion on this classification, which does not neatly fit with cryptoassets, the view that cryptoassets constitute property has been accepted several times by the High Court. This has provided much-needed legal clarity as to the status of cryptoassets, and how they are to be treated under existing laws and frameworks. This approach by the High Court has meant that England and Wales have emerged as a favourable forum for resolving cryptoassets disputes, as the legal clarity provided allows for the application for well-established laws to this emerging asset class.

Are Cryptoassets Regulated in the UK?

The UK has positioned itself as a key participant in shaping the regulatory landscape for cryptoassets, with bodies such as the Financial Conduct Authority (FCA) taking steps to define and further classify cryptoassets.

Broadly speaking, the current FCA regulatory regime refers to cryptoassets by way of a token taxonomy, which then dictate whether a cryptoasset is regulated or unregulated.

Security tokens and e-money tokens are regulated by the FCA, whereas exchange tokens and utility tokens are considered unregulated tokens.

  • Security Tokens: These are cryptoassets with characteristics causing them to meet the definition of a Specified Investment as set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. An example of a security token is a cryptoasset that represents shares in a company or functions as a debt instrument.

A security token essentially grants the holder financial rights, akin to a share or a bond, and cryptoassets which exhibit characteristics and functions of a security token would be regulated.

  • E-money tokens: These are cryptoassets which meet the definition of e-money and are subject to the Electronic Money Regulations 2011, and fall within the scope of regulation.
  • Utility Tokens: These are cryptoassets which essentially act as digital coupons for the service, application or ecosystem they are associated with. They do not confer ownership rights (unlike security tokens) and nor do they represent an investment in the issuer. They are often used as a means of exchange for goods or services, or to acquire access to a particular service or application. Utility tokens are unregulated – examples include Basic Attention Token (BAT), Filecoin (FIL), and Axie Infinity (AXS).
  • Exchange Tokens: These include cryptoassets that are used in a similar way to traditional fiat currency as a means of exchange, although they do not meet the criteria to be considered a currency. Similar to Utility tokens, they do not grant the holder any ownership rights or rights associated with specified investments. They are often held as speculative investments, as well as a means of exchange. Exchange tokens are unregulated, and examples include Bitcoin (BTC) and Ether (ETH).

The FCA takes a substance over form view in relation to cryptoassets. In other words, if a cryptoasset has the substance of a traditional financial instrument, regardless of whether it is in digital form, it will fall under the FCA’s regulatory ambit.

Cryptoassets lacking the characteristics of a traditional financial instrument, including those like Bitcoin, Ether, and other various utility and exchange tokens, are not currently regulated. It is also prudent to note that even if a cryptoasset is unregulated by the FCA, certain activities relating to or involving those cryptoassets may trigger other regulatory regimes.

The prevailing sentiment appears to be indicating increasing regulation and oversight into the crypto sector, driven by concerns in relation to consumer protection, stability of the financial markets, and various financial scandals that have happened within the crypto sector in recent years. There is an ongoing consultation which proposes to bring cryptoassets within the scope of existing legislation by considering them as a specified investment under the Financial Services and Markets Act (Regulated Activities) Order 2001. The consultation process remains underway, and its outcomes will significantly influence the future regulatory framework for cryptoassets.

Conclusion

The landscape of cryptoassets and their regulation is complex, rapidly evolving, and varies across jurisdictions. The implications for individual investors and cryptoasset enterprises are substantial. The complexities of cryptoassets covered in this article only scratch the surface, and it is essential to seek out expert advice in order to ensure that guidance is tailored to one’s situation.

Nick Marshall comments on downsizing in StartUps.co.uk

Posted on: August 23rd, 2023 by AlexT

Director Nick Marshall explores some of the key considerations businesses must bear in mind when looking to downsize or relocate, in StartUps.co.uk.

Nick’s comments were published in StartUps.co.uk, 22 August 2023, and can be found here.

“The decision for companies to relocate is now influenced by factors beyond just hard cash.

“For many businesses, there are a number of positives to downsizing and chief among these is the ability to bring down overhead costs, including rent, service charge, insurance premiums, business rates and utilities, as well as furniture and IT equipment.

“Other benefits include the flexibility offered to employees by hybrid working plans and the associated benefits for mental health and wellbeing, and a decreased number of trips to the office – cutting down on commute costs, time and carbon footprint.

“This is not to say the downsizing is purely beneficial for businesses and, in many cases, the decision to downsize is easier said than done, and businesses who rent their office space must be wary of the fact that they are tied down by often lengthy leases which they can’t get out of at short notice, simply to reduce overheads.

“Often there are also additional costs associated with leaving a lease early and, given it is usual for at least 6 months’ notice to be given to a landlord, cost savings are not going to be immediate. Tenants may also find themselves having to make a large payment to its landlord for dilapidations, even after they have relocated.

“Downsizing may also have a negative effect on office culture and wellbeing, alienating the very people that generate and process the business. Younger employees may also find their development stunted by the move to working from home on a permanent or semi-permanent basis, and it is vital that the decision to downsize does not have a negative impact on such staff.

“Finding the balance between these factors will no doubt be crucial in a company’s decision to downsize.”

Sarah Gallagher comments on new build real estate potential in The Express

Posted on: August 21st, 2023 by AlexT

In light of recent calls to repurpose London golf courses, Senior Associate Sarah Gallagher discusses how new build real estate could help ease the housing crisis.

Sarah’s comments were published in The Express, 21 August 2023, and can be found here.

“During the ongoing housing crisis, it seems disproportionate for so few to benefit from these green spaces whilst many struggle to get on the property ladder. In addition to this, cases of homelessness in London rose by over 50% in the last 10 years. 

“Many councils have already pledged a scheme of huge development within the next few years, such as Bromley, a borough with circa 18 golf courses, which has committed to the construction of over 10,000 new homes between 2015 and 2030 – commitments which seem at best extremely ambitious. 

“The vast amount of land afforded to golf courses, if redirected towards housing, would allow developers to construct new homes which would benefit from plenty of urban green space whilst remaining within an easy commute of the city.”

Lawrence Stephens launches Sports & Entertainment Department

Posted on: August 8th, 2023 by AlexT

Following the launch of Lawrence Stephens’ brand new Sports & Entertainment department, Senior Director Steven Bernstein, Director Mohit Pasricha, Senior Associate Jake Cohen and Associate William Bowyer spoke to Law360 about expansion, growth and providing a full-service approach to clients.

The team’s comments were published in Law360, 8 August 2023, and can be found here.

Discussing the firm’s recent growth, Steven explained that Lawrence Stephens’ recent expansion has allowed the firm to move towards a full-service model, with each practice allowing for cross-referral to better service and expand its client base.

The appointment of the Sports & Entertainment team, following the arrival of new Banking, Employment and Regulatory Solutions departments, has been a crucial part of the firm’s growth.

Commenting on building a practice, Mohit explained “I learned very early on that you need to do really good work and get known for your work, and with time it will grow organically.”

Mohit stated that the decision to join the firm was “a no-brainer” because of the firm’s wide range of practice areas and full-service approach, a huge benefit to the team’s client base of individual athletes and entertainers who may require a range of legal services ranging from real estate to employment.

“We’re very fortunate as a team to have built up a bank of really good clients,” Mohit said. “The opportunity came to join Lawrence Stephens and take forward what we have built, not just in terms of growing the client base, but in terms of extending the service that we were providing previously.”

The team’s appointment was also covered in the Law Society Gazette, New Law Journal and eprivateclient.

Lawrence Stephens Celebrates FEBE Growth Companies at Nobu Hotel Shoreditch

Posted on: July 14th, 2023 by Natasha Cox

Lawrence Stephens continues to partner with FEBE (For Entrepreneurs By Entrepreneurs), an exceptional company that compiles the renowned Growth 100 list, highlighting the top growth companies in the UK.

We recently had the pleasure of hosting the FEBE growth companies, affectionately known as the FEBE Family, at a vibrant event held at the illustrious Nobu Hotel in Shoreditch.

The evening was filled with inspiration and camaraderie as we gathered with remarkable entrepreneurs, eager to share their stories and celebrate their entrepreneurial spirit. The Lawrence Stephens team is honoured to have been part of such an extraordinary occasion, where we could witness first-hand the ingenuity and resilience that define these business leaders.

Building a business from scratch is an arduous task that demands unwavering dedication, countless hours of hard work, and the ability to adapt in the face of adversity. The entrepreneurs and business owners present at the event were already well aware of these challenges, as they have conquered them time and again.

Each person in the room epitomized resilience and tenacity, demonstrating their unwavering commitment to growth. They have successfully expanded their companies, showcased their progressive leadership and is a testament to the power of perseverance.

The event was an opportunity to come together, not only to acknowledge our individual achievements but also to celebrate the accomplishments of others. FEBE truly embodies the spirit of a family, fostering guidance, knowledge sharing, and relationship building among its members.

We extend our heartfelt congratulations to all the outstanding companies that made the esteemed Growth List for 2023, as well as those recognized on the Growth List for 2022 and the Ones to Watch List. Your achievements inspire us all and set the bar high for the future.

In his speech, Steven Bernstein, Senior Director at Lawrence Stephens, drew upon his own journey as a business owner and founder. Reflecting on his past experiences, he emphasized the importance of pursuing personal fulfilment and finding appreciation within one’s own organization.

Over the past 26 years, Lawrence Stephens has experienced numerous triumphs and challenges. The firm has grown from a small team to a diverse group of 100 lawyers. From the outset, the focus has always been on building a legal firm that values clients, prioritizes integrity, and fosters a positive culture. As Steven expressed, “Ultimately, it’s about working with people you like.”

Looking ahead, we remain dedicated to innovation and embrace change. By doing so, we can shape the trajectory of our industries, leaving a lasting impact on the business landscape and inspiring future generations of entrepreneurs to dream big.

Together with FEBE, Lawrence Stephens will continue to support and champion the growth and success of entrepreneurs, ensuring that their journeys are guided by integrity, innovation, and unwavering commitment to excellence.

Steven Bernstein, Senior Director comments: “Building a business is about more than just profit; it’s about creating a culture of collaboration and respect. Last night, we celebrated the remarkable spirit of innovation and perseverance that unites all of us in the face of difficulty.”

Ricardo Geada discusses the regulation of HHC in Analytical Cannabis

Posted on: July 12th, 2023 by AlexT

Director and Head of Regulatory Solutions Ricardo Geada explores how the rise of HHC and synthetic cannabidiol products has created an abundance of issues for the CBD market.

Ricardo’s article was published in Analytical Cannabis, 11 July 2023, and can be found here.

Several weeks ago, France became the latest country to ban the use of the synthetic cannabis compound hexahyrdocannabinol (HHC). Operators in the cannabis market are coming under increased regulatory pressure with regard to their products. France’s legislative action makes it the 11th European state to either ban or regulate the new substance, which can be synthesised from CBD extracted from low-THC cannabis plants and is reported to have similar psychoactive effects as marijuana’s THC.

HHC’s swift rise to prominence has created an abundance of issues for the CBD market, with little research having so far been carried out with regard to its potential health risks and psychoactive effects. As such, a growing number of jurisdictions have erred on the side of caution and moved to either limit or ban the use of HHC until more is known about its properties and effects. CBD operators have found themselves the subject of raids to seize their HHC products, impairing them financially as well as exposing them to the risk of legislators’ sanctions for their actions.

As the regulatory net tightens around the world, CBD producers and distributors are being sent a strong signal that operating in the previously grey area of HHC is rapidly becoming a greater risk. For the time being, they may be better placed pausing production of new and synthetic cannabidiol products until the rules and laws governing its use becomes clearer, especially given the strength of the political drive to curtail its consumption.

French MEP Aurelia Beigneux told the European Commission earlier last month that HHC was “flooding our continent”, questioning whether the Commission planned to ban the substance across all member states as a way to end the “legal limbo” from which it currently benefited. She noted what she claimed were HHC’s many adverse effects, including its causing of anxiety, depression and damage to the neurological and cardiovascular systems. While the extremely low level of THC in HHC means that it does not have the same deleterious psychotropic effects as cannabis, many politicians have called for it to be added to the EC’s list of addictive substances due to the volume of reports of users’ addiction to the drug.

Opponents of a full ban of HHC point to the fact that the simplicity of its synthesising from CBD means that illicit market production would soar in the event of prohibition, leading to associated health risks for consumers, as wholly unregulated and unmonitored products are distributed by unscrupulous dealers. However, there appears to be a general consensus that, even if an outright ban is not appropriate or viable, there must still be a strong set of rules heavily limiting the production and sale of HHC in the near future.

Such vehement opposition to HHC has been replicated across the continent, indicating that the crackdown on the substance will continue to gather pace in the coming months. Regulators are clearly concerned about the ease with which CBD can be synthesised into HHC and other new variants, none of which yet appear in the listed category of cannabinoids in many countries due to their novelty.

As a result, many current regulatory frameworks do not govern the use of HHC in the way that CBD and cannabis are regulated, which has led many producers to take advantage of the vacuum in the meantime. However, the push for thorough testing of HHC will likely see the loophole closed in increasing numbers of jurisdictions in the short to medium term, giving pause for thought to any operator considering remaining in the HHC marketplace.

The fact that France has opted to ban HHC is also noteworthy against the backdrop of its previous stance towards CBD. At the end of December 2022, the French Council of State overturned a ban on the sale of CBD flowers in the country, stating that a general and absolute ban on the marketing of the product was “disproportionate”, on the basis that the THC content of the dried flowers was less than 0.3%. The CBD industry welcomed the move, seeing it as a positive sign of increased acceptance of their products. But France’s latest legislative change appears to have dashed operators’ hopes once again.

Given the febrile political climate, rigorous testing of HHC and its variants is guaranteed to be carried out by regulators and medical experts around the world. CBD operators should welcome such a move so that they are afforded clarity as to what they can and cannot produce, but more importantly understand whether such variants pose any health risks to consumers, rather than take the various risks of continuing to operate outside of regulatory boundaries on the proviso that HHC and other related substances are not yet effectively defined in law. In doing so, the cannabis and CBD industry would be better regarded on the world stage.

Steven Bernstein comments on the growth of SME law firms in The Brief

Posted on: July 6th, 2023 by AlexT

Co-Founder and Senior Director Steven Bernstein analyses the recent LexisNexis Bellwether survey examining the changing ways in which SME law firms are growing their business. 

Steven’s comments were published in BCL Legal’s The Brief and can be found here.
 

With this report, it’s unsurprising to see large-scale law firm mergers falling out of favour with those firms that are looking to grow their business. A merger can bring disruption to a firm, as it takes time and effort to fully integrate two businesses, which may have conflicting cultures, and this issue will be exacerbated in the current climate where many people work from home for much of the week.

Organic growth and business development, by contrast, appear far more popular for this reason.

Culture is a massively important part of the way we do things at Lawrence Stephens. As we have grown our firm and continued to attract individuals and teams with existing followings, we have sought to put our culture and environment at the forefront of what we do, and ensure we bring in like-minded individuals.

While large, ‘flashy’ mergers might be falling out of favour with SME law firms, the combination of organic growth with smaller acquisitions seems to be bearing fruit. By bringing in individuals or small teams with an existing following, as opposed to entire firms, the transition process is far less disruptive and takes less time to embed new joiners into the culture of a firm.

While business development and marketing is of course an essential part of winning new business, it is far easier to get additional work from an existing client than it is to secure new business from a new client. As Lawrence Stephens continues to grow, over the coming year we are placing a greater emphasis on cross-selling our services to existing clients, as our wide range of departments and expertise allows us to provide a full-service to clients while also winning new business for a range of departments.

Lawrence Stephens completes another acquisition for HFMC Wealth

Posted on: July 5th, 2023 by Natasha Cox

Lawrence Stephens’ acted on behalf of its established and highly valued client,  HFMC Wealth on the acquisition of Weston-Cummins Ltd, in a deal that was completed on 30 June 2023.

The collaborative effort across the Corporate, Banking, and Property teams at Lawrence Stephens enabled an efficient and seamless transaction.

The transaction accounts for HMFC’s second acquisition of 2023, and contributes to the strength of their offering. Weston Cummins advises some 265 high net worth families and  will add circa £350mn of assets under management  to HFMC Wealth. The clients and culture of Weston Cummins marries perfectly with HFMC Wealth’s High Net Worth proposition.

The corporate aspect of the deal was led by Senior Director, Jeff Rubenstein with assistance from solicitor’s Lucy Cadley and Izzy Moran and Trainee Solicitor, Carla Bernstein. The banking team was led by Head of Banking, Ajoy Bose-Mallick with assistance from Associate, Aashay Knights. Director, Nick Marshall dealt with the property aspects.

Jeff Rubenstein, Senior Director, and Head of Corporate and Commercial comments: “It was a pleasure working again with HFMC  on this acquisition, and we look forward to continuing to work with the HFMC team going forward  and witnessing their continued growth. As always, I am incredibly proud of our team’s exceptional performance in completing this significant transaction. Their collaborative spirit has been instrumental in getting this deal across the line.”

Phil Patient, COO, HFMC Wealth, comments: “The acquisition marks a significant step forward for HFMC Wealth as we continue to expand and strengthen our Private Client and Employee Benefits offerings. We are delighted to have worked with Lawrence Stephens, whose expertise and professionalism have been instrumental in completing a second transaction together in 2023. This strategic move aligns perfectly with our growth objectives and will enable us to provide even greater value to our clients. We look forward to the future opportunities that this acquisition brings.”

Lawrence Stephens conquers Mount Snowdon for Crohn’s and Colitis UK

Posted on: July 3rd, 2023 by Natasha Cox

Team Lawrence Stephens completes the monumental challenge of summiting Snowdon, in support of its Charity Partner of the Year, Crohn’s and Colitis UK.

The sunrise trek, which took place on 30 June 2023, was a testament to the team’s unwavering dedication and the core values we hold dear as a firm.

Setting off into the darkness, the team embraced the biting cold and rugged terrain, pushing their limits to raise funds and awareness for  Crohn’s and Colitis UK. Through their incredible effort and commitment, they managed to surpass our fundraising goal, amassing an impressive total of over £5,000.

We’re proud charity partners of Crohn’s and Colitis UK and recognise the immense challenges faced by individuals affected by these conditions and their families. By aligning our efforts with this remarkable organization, we are taking concrete steps to make a lasting impact, raise awareness and improve lives.

Johnny Nichols, Chief Operating Officer comments: “The Lawrence Stephens team approached the Snowdon trek with determination and unity, raising over £5,000 for Crohn’s & Colitis UK, our charity of the year. Their teamwork and energy serve as a shining example of our commitment to excellence and making a positive difference in the community.”

We extend our deepest gratitude to all the sponsors, supporters, and well-wishers who contributed to the success of this initiative.

Laura Gill explores fixtures and fittings disputes in Today’s Conveyancer

Posted on: June 28th, 2023 by AlexT

Laura Gill, Senior Associate in the Residential Real Estate department, discusses fixtures and fittings agreements and how both buyers and sellers must be open about their expectations to avoid disputes.

Laura’s article was published in Today’s Conveyancer, 28 June 2023, and can be found here.

After a near decade-long legal battle, magistrates finally ordered the return of fixtures and fittings stripped from a £1.5m manor house by the seller after completion of the sale. The seller had, in the magistrates’ opinion, “systematically” removed any object that he could from the property ahead of handing it over to the buyers, including stripping it of doors, windows, fireplaces and floors. As such, he was instructed to hand back all of the missing items, including those recovered by police during their involvement in the case.

While an extreme example of disputes that can arise over what fixtures and fittings belong to which party in a property transaction, the situation serves as a cautionary tale to buyers and sellers alike when negotiating terms ahead of completion. To avoid anything like the situation the buyers found themselves in after the gutting of their new home in the aforementioned dispute, both parties should be open and upfront about fixtures and fittings during the early stages of the transaction and preferably at the point of offer.

While there are no specific laws or legislation stipulating what should be left or removed when selling a property, the Law Society Fitting and Contents Form (TA10) should be used under the Law Society Conveyancing Protocol. If any items fall outside the scope of this form, it is strongly recommended that a separate inventory of items to include their respective values be created to form part of the sale contract.

The TA10 form is annexed to the contract and forms part of the contract of sale. It is therefore legally binding on the buyer and the seller. If the seller removes anything listed as included in the purchase price from the property on completion, they may find themselves in breach of contract and liable to be sued.

Fixtures are defined as the items in a property that are attached to the building or the land, for example integrated appliances, kitchen units and worktops. They also include carpets, doors, built-in wardrobes, radiators, boilers and central heating systems.

Fittings are those items that are not attached to the property unless by a screw or a nail such as pictures and mirrors. Other examples include freestanding goods like fridges, freezers, washing machines and dishwashers that are not built in or fully integrated, furniture, beds and tables.

More often than not, sellers tend to include white goods in the purchase price, although they are not bound to do so, and can remove them if they have stipulated that they are going to do so. Buyers should always check the TA10 form to make sure this is the case. Depending on the age and value of these goods, the seller does on occasion offer them for sale to the buyer.

Items that should be generally left in situ and which a buyer would not ordinarily expect to be removed from the property are fixtures such as the doorbell, carpets, plug and light sockets, curtain poles and light fittings.

If, however, a seller wishes to remove a light fitting, they are required when completing the Property Information Form to confirm that they will replace such light fittings with a ceiling rose, flex, bulb holder and bulb. Buyers should check that the seller has confirmed this if they are expecting light fittings to be removed.

Another important factor to consider is Stamp Duty, which does not apply to removable fittings and contents. Any fittings attached to the property will be chargeable to Stamp Duty but, in most cases, Stamp Duty is attributable to the consideration (that is, the purchase price) without any apportionment to the attached fittings.

If both parties are agreeable, it is possible to negotiate a price for more valuable items that the seller may not wish to include in the purchase price in order to avoid disappointment for the buyer and ensure that when they move into their new home, they don’t find themselves short-changed.

The seller also avoids being in breach of contract if they have an understanding from the outset of what items need to be removed from the property on completion. If a seller has an onward purchase, it also helps them manage negotiations on what should be included in their related purchase property.

As such, the seller must be reasonable and transparent about exactly what is to stay and what is to go, and the buyer should also be open and frank about their expectations in this regard.