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Politicians need to wipe the blood from their hands from liberalising the NHS
All the main political parties in England have “blood on their hands”, and we’re never going to get anywhere near the Chilcot Inquiry to sort out how it happened. The ‘weapons of mass destruction’ unleashed by corporate agents seeded everywhere in think tanks, media and politics have gone out of the way on a tirade of abuse against workers in the public sector. There are so many nexuses which have become uncoupled, that the NHS and social care systems no longer have anything like a situation approaching credibility.
Top CEOs in the NHS in England can still receive generous renumeration, even if their patient records are worse than the Black Hole of Calcutta. Even if multinational corporates do not perform adequately on a contract, the NHS does not have the legal know-how to ‘performance manage’ these contracts, and will not wish to spend the money. The NHS is scared of imposing any penalties, because of the powerful lawyers of multinational corporates. Above all, in addition to ‘patient safety’, that other secret weapon is used, namely ‘continuity of care’. Continuity of care is another chameleon wheeled out in a guise which suits its purpose at any one time.
Whilst the Blairites continue to espouse that it does not matter who is a Doctor at any one time, corporates are equally happy to use the legal stun gun of saying continuity of care will suffer if contracts are disrupted.One of the lessons from social care should have been that there are pockets of extremely poor social care, fragmented and expensive. As the next Government wishes to integrate care, with or without whole person care, one suspects that merging a means-tested system with one which isn’t will not be “no problem” as some senior health commentators have pretended. The idea that a self-directed budget where you pay for your service is “free at the point of use” is twisting the truth beyond all banality.
And these privatised contracts are neither accidental or insubstantial. One is a 10-year contract worth £1.2 billion for providing cancer services in Staffordshire, and there is also a five-year contract worth £800 million for the care of older people in Cambridge to last for the duration of the next Parliament. Both Labour and the Conservatives set in the present and previous administrations set the mood music for this, and politicians need to wipe the blood from their hands of the stains of neoliberalism. The new Jerusalem offered by private companies fraudulently (but legally) using the NHS logo has clearly run its course. Some in the UK Labour Party should be ashamed of itself for not articulating more clearly their opposition to such obscene onslaughts to the socialist founding principles of the NHS. The public clearly want a properly funded NHS. It is up to a credible party to provide that. Co-payments are a tax on the sick. Even “Pat” Hewitt, the doyenne of a previous Labour administrator, gave a speech to the London School of Economics in 2007 saying it would be madness to go down this route.
And some of the performance of companies to which the NHS has been outsourced is an insult to taxpayers, hardworking or not. Outsourcing giant Serco today announced plans to withdraw from the clinical health services market in a move precipitated by a multimillion pound loss on its NHS contracts. It is possible that Serco’s planned withdrawal could influence significantly how other private firms view the prospect of bidding for contracts involving patient facing services.
The group had already made an early exit from its contracts to provide Cornwall’s out of hours services and clinical services to Braintree Community Hospital.
Introduction of competition into the liberalised market generally has been a policy disaster of totemic proportions, producing sources of corporate fraud and misfeasance, a policy crowbar which can make mergers on the basis of clinical need unlawful, a mechanism for introducing substantial additional transaction costs, and a way of introducing private providers where profit goes into shareholders’ pockets not as surpluses in improving the service. Think tanks which aggressively pimped this have blood on their hands. And they will need to backpedal fast on their prostitution of the purchaser-provider split too.
Earlier this year, it was hailed as a success that the first private sector operator of an NHS hospital has halved its losses in the year to December. AIM-quoted Circle Holdings took over the running of Hinchingbrooke Hospital in Cambridgeshire in 2012 in a controversial part-privatisation. Private companies though wish to have their cake and eat it. They want to hide behind the cloak afforded by the Freedom of Information Act from Tony Blair’s reign. And why should the private providers get protection they haven’t earnt like a welfare claimant so despised by Iain Duncan Smith and Rachel Reeves? Private patients cannot complain to the Public Services Ombudsman for Wales unless they have received treatment commissioned and funded by the NHS. But the Welsh government has now said it has has no plans to bring private health providers within the ombudsman’s remit. Would the private sector like to contribute towards the education and training of the healthcare workforce?
This debacle from Serco, in fact, follows hot on the heels of news from Musgrove Hospital, Taunton, Somerset, where it turns out that dozens of people have been left with significant damage after undergoing operations provided by a private healthcare company at an NHS hospital. The routine cataract operations were carried out by the private provider, Vanguard Healthcare, in May to help to reduce a backlog at Musgrove Park. But the hospital’s contract with Vanguard Healthcare was terminated just a few days after thirty patients, most elderly and some frail, reported complications, including blurred vision and signs of inflammation including pain and swelling.
Laurence Vick, a medical negligence lawyer and the head of the clinical negligence team at Michelmores solicitors in Exeter, had been approached by some of the patients for whom there had clearly been a breakdown of a duty of care. Vick further said the case highlighted the “uneasy relationship” between the NHS and the private sector. He said the question of who paid – when outsourced NHS treatment – failed was of growing importance as more services were handed over to the private sector. This “uneasy relationship” which Vick refers to is likely to get massively worse as one cannot pin down who is legally accountable for failure for performance by subcontractors in “the prime contractor model”, where a main contractor can lead subcontracts for contracts say lasting ten years.
So Tony Blair was blatantly wrong: it does matter who provides NHS care. Blairites have unleashed ideological weapons of mass destruction on the Welfare State, and someone should pay the penalty for this. And it’s worse than that – you don’t know any more who’s in receipt of your taxes when you pay for what you think is the NHS. The Welfare State is being killed softly: and all English neoliberal parties have blood on their hands.
Polling firm ComRes recently found that 49% of people would be prepared to pay more tax to help fund the health service, one in three (33%) people said they would not be ready to do so, and 18% did not know either way. The public’s willingness to pay extra tax to help the NHS has reached its highest level in over a decade amid growing concern about hospitals slipping into the red, waiting lists lengthening and the service becoming unsustainable. The plan always was from the neoliberal advocates to produce a small state with low taxes, but what we have ended up is a moderate state with moderate-high taxes to fund the shareholder dividends of the outsourced companies in a range of sectors, including probation and health.
The Conservatives feel that their voters do not like ‘unfairness’ with one person obtaining an unfair advantage over another, but what we’ve got now is outsourced companies still be paid for unbelievably bad performance, and top CEOs in private providers experiencing a world nothing like their nursing counterparts in the NHS.
Labour will always try to woo the City all it wants, as per
But if disenfranchises hardworking nurses maintaining the fabric of the NHS, and brown nosing the City, it will find it does not get elected. And many socialists in Labour will not want to have blood on their hands in being part of Labour either. This because there is no obvious disinfectant yet.
All a far cry from the Spirit of ’45.
Can lawyers benefit from understanding business? Emphatically, yes.
I am writing this post completely independently of BPP. As a current LPC student at BPP Law School in Holborn, I was very interested to read a recent article about a pilot of a new course to commence in September 2012, thought to be the first of its kind, called “MA (LPC with Business)”. The LPC of course has a formal name in itself ‘Postgraduate Diploma in Legal Practice’, so it makes complete sense to ‘top up’ LPC modules with further modules to constitute a degree-level course.
I think the critical thing about this new course is that it allows students to study both business and law concurrently. I am one of the few people in the UK to have done postgraduate qualifications in law (LLM) and business (MBA), though there are some very senior people who have done both. I therefore studied business and law separately, and it took me around three or four years in total, but I think a combined Masters for future trainee lawyers is a very good idea.
Most of the general public do not have a good understanding of what business is. The tragedy is most people on completing the GDL do not either, and even the exposure to management theory and practice is limited on the compulsory practice area ‘Business Law Practice’ on the Legal Practice Course. This is limiting, as I believe that corporate lawyers benefit from understanding the business motives of their clients. I don’t believe this is the same thing at all as necessitating a psychiatrist should have a history of severe depression, but I think it’s more similar to a cardiologist wishing to help a patient with his depression so that his heart symptoms get better. This analogy brings out a problem of this relationship – the patient does not probably wish to come to see a cardiologist about his depression, and would prefer to see a specialist psychiatrist anyway about his depression.
You learn things in business management which you simply do not learn in the business law practice course in the LPC. There are too many to list here in this brief personal opinion, but a clear example is how to draft up a business plan. Business students also learn in depth about organisations and culture, corporate strategy, operations, leadership, marketing, economics and (sometimes) innovation. More specifically, there are “learning outcomes” which are clearly beneficial in this context (see for example module 1 of the SJ Berwin “Masters in Law” with Business programme prospectus):
- assess the relevance of concepts of economic theory to the competitive context within which a business operates;
- apply techniques of business and market analysis;
- analyse the determinants of competitive advantage and the techniques for assessing strategic potential;
- examine a range of techniques used by commercial organisations as the basis for formulating a business strategy and creating a strategic plan for leaders in a business;
- consider the challenges presented in implementing a business strategy and achieving organisational alignment; and
- critically assess business practice in relation to risk management, corporate governance and corporate social responsibility.
Likewise, you can learn things in postgraduate legal studies which you don’t learn in business, like how to draft up commercial legal agreements, the details of intellectual property and their protection, and the regulation of financial activities in the City. In my LLM (done at the College of Law), the course providers were at pains to ensure you could ‘read’ a complicated commercial law case, knew how to pitch legal services to a client through an oral presentation, and knew how to draft complicated agreements. I have not done these activities to such a detailed level on the LPC.
I don’t think it’s a problem that I never studied these concurrently, however. For example, the award-winning Simmons and Simmons LPC/MBA course allows you to study these subjects side-by-side. Either way, I feel hand-on-heart it’s a brilliant strategy by BPP to offer such an integrated specialised training, which I can see as very appealing to the corporate clients of BPP. As I am clearly not doing these courses myself, I hope you will allow me my strong endorsement of them!
Welcome to the BPP Legal Awareness Society!
The BPP Legal Awareness Society is part of a vibrant community of student societies at BPP, which any student of BPP can join.
Non-members of BPP are warmly invited to keep in touch with the Society’s activities through its lively Twitter thread, along with its blog which is kept up-to-date by a number of members of the society. Zerbakht is the Society’s officer for corporate news content on the blog.
It is a separate entity from BPP, however its members feel it reflects the lively spirit and commitment to high standards of BPP. The mission of the society statement is: “Putting law at the heart of business“. This explains that we wish to explain to students, and the public at large, why an understanding of the law is pivotal to an understanding of business and the rest of society.
It holds regular meetings at BPP Law School Holborn (Sam is in charge of our events). Future guest speakers, in the near future, including a partner in English employment law, an expert in social media and the law, and a member of a leading ABS in England. All students across the wide range of BPP-taught disciplines are invited to attend. We also hope to have a greater outreach – whilst the Twitter thread has been going for some time, we’ll soon be publishing regular podcasts. Katie-Claire is the Society’s Officer in charge of that project. Gizem (the Society’s Corporate Liaison Officer) will be promoting good relationships with City firms, where many BPP law students end up completing their training contract at least.
We have a new logo. It’s a lion, to reflect our shared values with the place where we study. However. it’s distinct. The image represents the student body, which is friendly, intelligent, energetic, young, resourceful and focused.
If you’re a past, current, or future member of BPP, you can join here. We should especially like to hear from you if you’re at an early stage in (or about to start) an undergraduate degree course, but considering a career in business, law or finance.
Official list of meetings this term by the BPP Legal Awareness Society in the City
The meetings of the BPP Legal Awareness Society, run by students of BPP at the BPP Business School, will take place as follows. All student members of BPP, particularly those in finance, business, marketing, accountancy and law, are most welcome. The BPP Legal Awareness Society wishes to promote commonalities within these professional disciplines. In particular, this Society emphasises the importance of law and regulation to businesses, and an understanding of business strategy to businesses.
Wednesday 2 November 3- 4pm; room L2, BPP Business School St Mary Axe
IPOs and rights issues : the importance of flotations in the City
Wednesday 16 November 3 – 4 pm; room L2, BPP Business School St Mary Axe
Debt finance: investment options for the company
Wednesday 30 November 3 – 4 pm – room L2, BPP Business School St Mary Axe
Joint ventures: practical legal issues for joint ventures
Wednesday 14 December 3 – 4 pm. – room L2, BPP Business School St Mary Axe
Arbitration: mechanisms for dispute resolution for businesses
You can be pro-business, without being pro-greed
What annoys me about some people is that they equate capitalism with greed. This is wrong. Businesses work in the context of the rest of Society, or at least that is the intention. It should never be a ‘them against us’ situation, as we are ‘all in it together’ – law, business and Society, to coin a phrase.
The new @Legal_Recruit verbal reasoning practice assessment for law students
The @Legal_Recruit system (which will be available here) is a very attractive easy-to-use cloud-based service which will allow @Legal_Recruit learners to complete sample tests, under real assessment conditions.
It will be available on Monday 3 October 2011 for the first time.
Current law students, who are doing the GDL, LPC, LLB(Hons) or LLM, especially those who are seeking training contracts or vacation placements for 2013/4/5 being made available in the next academic year may find this new service/product useful. It will be available on the internet via a secure website, and will cost £7.50 for unrestricted lifetime use. All Legal Recruit learners will have their own secure website username and password, and be invited to participate in the development of the huge bank of validated questions. These questions are set in a fair way, with due attention to equality, diversity and culture.
This product has been built because it is felt by many that law students, the staff of their colleagues/universities (including their academics and their career services) and corporate law recruiting managers that the pivotal importance of the verbal reasoning test is grossly underestimated. This is not sensible, given the intense effort needed to complete any qualification in law. However, if your performance in a verbal reasoning test, and you fail to meet the cut-off score, it is possible that you will not be invited for interview, despite having a II.1 or above. This is clearly a tragedy.
Such practice will be ideal for any law students needing to complete a SHL Direct assessment for their real training contract/vacation placement application. Candidates are strongly advised to look, as a top priority, the practice tests in the practice area of the SHL website. There you can take a full-length verbal reasoning test which has been made available from the main SHL Direct website and it’s well worth looking at the example questions. You’ll also most likely enjoy looking at the advice given about verbal reasoning tests on leading corporate law recruitment sites, such as Eversheds and Clifford Chance. Obviously, Legal_Recruit does not actively endorse any of the entities above, or vice versa.
There will be very clear instructions in the @Legal_Recruit practice assessments which are akin to the current SHL verbal reasoning instructions. In the practice test, you are allowed to go backwards, although in the real assessment you will not be given this option. You must complete the practice examples before you do the test, and you are told not to press any function keys or do any background jobs such as printing during the test itself.
The word count per passage will ideally vary from 70 to 150, with a mean length of 107. Passages will avoid as far as possible the use of semi-colons, and be of no shorter than 8-10 words. They will be written in plain English, with no spelling or grammar errors. The passages will therefore avoid American spelling or American English. The mean number of words in a sentence will be about 15-20.
Assessments will consist of 30 questions, containing 15 passages (2 questions per passage). The 15 passages will be selected at random by the Legal_Recruit system from a huge database consisting of an equal number of questions in the following 16 subject areas.
- Biology
- Business
- Economics
- Education
- Engineering
- Environment
- Geography
- Geology
- Health and Safety
- Human resources
- Medicine
- Modern Languages
- Physics
- Technology
- Transport
@Legal_Recruit follows the leading twitter accounts in the world which daily produce news stories, which make excellent narratives for the verbal reasoning assessment that Legal_Recruit will be offering.
Legal_Recruit learners will be able to choose a maximum time permitted from 19 to 39 minutes; this is to that it’s easy to do the assessments with reasonable adjustments for learners who will benefit from them to allow them to perform on a ‘level-playing field’.
It’s interesting that there is no subject bias at all in the exemplars. Interestingly the passages appears to avoid contentious branding, politics, or subjects which are generally controversial.
It is essential for our system to work for our questions to be carefully set in keeping with the real verbal reasoning tests which our Legal_Recruit learners will face in their real assessments set by SHL for their training contract/vacation placements. If you would like to participate for free, and receive immediate feedback, in our sample assessments, please direct message @legalaware or @legal_recruit, and if there are any problems in me following you, please do let me know immediately, and I will remedy. We benefit from obtaining a huge bank of normative data, which indicates to us that all the questions are of the same (correct) standard, and from being able to give you an accurate indication of where you sit on the normal distribution curve.
You may enjoy following up-to-date developments in online psychometric assessment on the @SHLGROUP twitter feed.
I love the City
I actually love the City! My father used to wonder why I loved the City so much, during those dark days when I was working 80 hours a week for the NHS and hated it. Sure – the guys work hard in the City, but it’s just so much my kind of work. I am fully committed to my dementia research work, but I am very lucky I can do it ‘from a safe distance’. I am internationally well respected as one of the only experts in frontal variant frontotemporal dementia, and I wouldn’t change that in the world!
But I love the way the City thrives on teamwork to get results. The law has some extremely bright, charismatic, people on it who can understand the competitive advantage of their transactions, and can understand how to make them work even considering complicated extra-jurisdictional issues. When I travel to my Business School, I have an enormous sense of pride – especially so on a hot summer’s day for some reason. Indeed, the City reminds me of my happy days at Cambridge as a student (I was there for a decade), and especially my father.
The Future of Microsoft, The Future of Technology from Stanford's Entrepreneurship Corner
This is a lecture brought by the Stanford University ‘Entrepreneurship Corner’.
The website contains an unique bank of video clips which are relevant to business professionals.
Steve Ballmer, Microsoft CEO, shares his optimism for emerging innovation in the midst of economic turmoil, and the story of his own entrepreneurial path. He also speaks of his company’s continued investment in Internet-ready hardware and software that seeks progress in healthcare, education, and science.
Unsurprisingly, he starts his analysis with how badly the global economy is doing.
LegalAware meeting: How the law of Cloud Computing might relate to English SME Directors
The uptake of Cloud Computing
A “cloud service provider” is the business entity that offers the Cloud service. Well-known examples of Cloud Computing providers currently include: Amazon, Google, Microsoft, Dell and Salesforce. Definitions of the “cloud”vary, but one commonly-cited definition is that proposed by the US analysts Gartner:
“A style of computing where scalable and elastic IT capabilities are provided as a service to multiple customers using Internet technologies.”
Cloud Computing customers do not own the physical infrastructure, thus avoiding capital expenditure by renting usage from a third-party provider. The vast majority of clouds consume internet resources as a service, and customers pay only for the resources that they use. Many
Gartner further estimates that, over the course of the next five years, businesses will spend $112 billion cumulatively on Cloud Computing. The US share of the worldwide Cloud services market was 60% in 2009, and will be about 58% by the end of 2010. By 2014, this is estimated to be diluted to 50%, as other countries and regions begin to adopt Cloud services in more significant volumes.
In August 2010, a survey by the IT consultants Spiceworks found that SMEs appear to be driving the uptake of Cloud Computing. In the first half of 2010, 14% of SMEs reported using Cloud Computing services, and another 10% reported plans to deploy Cloud-based solutions. The BBC website on 7 December 2010, in fact, even announced 2011 as “the year of the Cloud”, based on a recent report.
Features of Cloud Computing
There are a number of features of Cloud Computing which are considered advantageous to the Cloud Computing customer. Key advantages include agility in restructuring computer infrastructure, greatly reduced capital expenditure, reliability, security, maintenance and the requirement of minimal IT skills.
There are further features of note:
- Location independence enables users to access systems using a web browser regardless of their location.
- Metering means that cloud computing resources usage should be measurable and should be metered per client and application on a daily, weekly, monthly, and yearly basis.
- Scalability: the key observation is that the ability of Cloud Computing to add or remove resources at a fine level and with a processing time of minutes (rather than weeks), allowing the matching of resources to workload with enormous subtlety.
It may not be immediately obvious to a SME director that there are threats posed by Cloud Computing about legal advice can be sought. My research found that, whilst the SME directors’ interests appear to be protected by Rights which are aspirational, the creation of an agreement, offered by a provider, in return for pay-per-use services, may fulfill the requirements of a contract in law. This contract is bilateral in nature (typical for sale of goods and services), as the parties exchange mutual promises. This contract may potentially protect the client before, during, and after any dispute, should one occur.
I conducted an original study to explore the beliefs, concerns and expectations of SME directors towards Cloud Computing. The relatively recent starting point for my reseafrch was the proposal by Gartner in July 2010 that Cloud Computing customers should have six “Rights” in their service.
Respondents were invited randomly through recruitment advertisements on the discussion board of the Institute of Directors LinkedIn page, Implu LinkedIn page and the main Ecademy discussion board. These internet social-networking sites allow UK directors to engage with topical issues from the business community, and much of the audience are technologically-minded. Only individuals at Director level were invited to respond to the survey.
The majority of respondents were directors of very small businesses with 1-5 members (39%), about a half were already using Cloud Computing (55%), but the vast majority had already heard of Cloud Computing (90%). The sample stated that they had most familiarity with SaaS computing (52%).
To ensure that the Directors were informed about the subject sufficient to answer the questions meaningfully, all respondents were invited to read the current Wikipedia entry on Cloud Computing. These same Directors were then invited to rate a range of features of Cloud Computing as being of particular importance to them, using a rating scale of 3 = most important and 0 = least important.
In descending order, the most important features in a list of ten were deemed to be as follows (figure in brackets denoting the mean number of points): reliability of services (2.6), security of services (2.5), ease of maintenance of services (2.2), cost (2.1), scalability of services (2.1), flexibility in future computer infrastructure organisation (2.1), device and location independence (2.0), ability to meter services (1.8), minimum IT skills involved (1.5) and multi-tenancy architecture (1.3). The two most important factors, reliability of the services and security of services, are arguably very important issues about which a lawyer can give good-quality advice to a commercial client.
The SWOT analysis of the overall business strategy readily identifies the risks of the business to be predominantly the legal risks which need to be managed through a successful risk strategy. Data privacy and security have consistently remained the key areas of concern for Cloud Computing customers at all levels. SMEs can now exploit high-end applications such as business analytics that were hitherto unavailable opportunities to them. Finally, concerns have traditionally centred on the lack of standards, but, in fairness, Cloud Computing providers are fast adopting standards, possibly in an attempt to avoid intervention by the lawyers.
Building trust with a client is now thought to be essential both for the work of a commercial lawyer to succeed, and for the lawyer to progress to the top of his profession. In the Parks model, trust between the client and the lawyer has been proposed to be essential for the relationship to progress from imparting knowledge and expertise to the initiation of a dialogue, and can greatly improve the success of a commercial lawyer in acting as a legal advisor.
The Avande gobal study of cloud computing of 2009 described the opinions of 502 respondents, consisting of C-level executives, business leaders and IT decision-makers from 16 different jurisdictions towards Cloud Computing. Interestingly, the survey identified that, as the economy went from uncertainty to collapse in the nine months between surveys, an increasing proportion of the respondents wished to take up Cloud Computing services.
In my research, I found that a much higher proportion of company directors were found wishing to embrace “service as a software” (SaaS) Cloud Computing (79%). The vast majority had experienced Cloud Computing anyway, and therefore it was very promising that satisfaction was very high (90%).
The Legal Services Act 2007 was enacted with the intention of liberalising and regulating the legal services profession in England and Wales, specifically to encourage more competition and to provide a new route for consumer complaints. The Act allows the customer, potentially, to access high quality legal advice relating to business, and has had the effect of greater convergence between commerce and the law. It is now relatively straightforward for multi-disciplinary teams specialising in commerce, finance, accounting and law to work together in understanding the needs of SMEs, start-ups and not for profit organisations.
The Gartner Rights and SMEs: legal implications
Gartner have proposed in 2010 six Rights ‘protecting’ the Cloud Computing customer.
The Directors were invited to rate each of the six Gartner Rights as being of particular importance to them, using a rating scale of 3 = most important and 0 = least important. In descending order, the most important features in a list of ten were deemed to be as follows (figures in brackets denoting the mean number of points):
- the Right to retain ownership, use and control one’s own data (2.5),
- the Right to know what security processes the provider follows (2.4),
- the Right to service-level agreements that address liabilities remediation and business outcomes (2.3),
- the Right to notification and choice about changes that affect the service consumers’ business processes (2.3),
- the Right to understand the technical limitations or requirements of the service up front (2.3),
- the Right to understand the legal requirements of jurisdictions in which the provider operates (2.1).
That the data implications of Cloud Computing are reported to be the most important to the Cloud Computing customers of this PFD survey is possibly of no great surprise, given the amount of media attention there is to data protection and security in both the general and specialist press.
It is worth noting that many customers appear prepared to read all the clauses of the SLA; I found 93% of respondents ready to do so. Nonetheless, the survey results also provided that SME directors believe that the service level agreement (“SLA”) should be written in ‘black-and-white’ law (69%), implying that business clients do not expect the law to be open to ‘wild’ interpretation.
At the end of the negotiation process, provider and consumer commit to an agreement. In SOA terms, this agreement is referred to as a SLA. This SLA is the foundation for the expected level of service between the consumer and the provider. It includes four important themes: the business, technical limitations and requirements, data and jurisdiction. It is essential the client optimises this SLA, and, as will be clear from the following discussion, it is hard to see how the client can achieve this without the professional advice from a specialist lawyer. 64% of respondents in the PFD study were concerned that some of the clauses may be non-negotiable.
A further potential solution for customers might be for them to have an exit strategy from these agreements in the form of clear termination Rights. If termination for convenience cannot be negotiated, an alternative strategy might be to negotiate termination Rights for poor performance, for example a “substantial service level failure”. An example of this might be, for example, failing to be available at least 95% in a given month, which would be extremely poor performance by almost anyone’s standard.
According to my research, the quality of service expected by customers is actually extremely high – a very high proportion of respondents (93%) expected the provider from being prohibited from suspending or terminating the services suddenly, and all respondents expected that the Cloud Computing provider should provide termination assistance when the contract ends. Also, in the PFD survey, 86% of respondents were interested in negotiating termination Rights for poor performance of the provider. By paying attention to termination Rights, it is possible for a customer to mitigate some of the risk in these smaller, non-critical, agreements.
Another main way in which ‘power’ can become shifted in favour of the provider is when the provider passes on the customer’s data to subcontractors with lower performance standards. Cloud customers are often surprised to learn that many providers rely on sub-contracts to increase physically the size of their own Clouds. I found that 79% of respondents would be concerned if the work were subcontracted, and all of the respondents replied that they expected their Rights in any subcontracting relationship to be explained in full.
It is perhaps unavoidable that Cloud service providers may need to take down its systems, interrupt its services or make other changes at some stage, in order to increase capacity and otherwise ensure that its infrastructure serves its consumers adequately in the long term. However, this Right recognises that customers need to be given details to guide their own business processes (for example, including advanced notification of major upgrades or system changes), and to be granted some control over when the provider makes the switch.
However, perhaps the greatest concerns that customers face when using a Cloud Computing solution are those relating to security and privacy. Once data are transferred to the Cloud, customers are forced to rely on the physical and information security of the whole provider to protect their valuable information. The providers are under obligation to comply with the data protection laws, but there has been no formal study of the understanding of people in SMEs regarding these laws, and their understanding of what protection they afford for their Cloud Computing services.
Where a business is located in the UK, it will be subject to the Data Protection Act 1998 (the Act) when handling personal data. As a result, if that business decides to use Cloud Computing, it will need to ensure that the Cloud Computing services comply with the Act. Under this Act, the data collector is the customer who is solely responsible for compliance with the Act. This includes the obligation to ensure that the customer retains close control over its personal data, even when the data is being processed by a third party on the customer’s behalf. It is likely that the Cloud Computing service provider will consider itself to be a data processor for the purposes of the Act.
Cloud Computing services in the UK may involve the transfer of personal data to data centres within countries outside the European Economic Area (EEA) To transfer personal data to a country outside the EEA, the data controller must first consider whether there is an adequate level of protection in that country and whether appropriate safeguards are in place.
Gartner has also provided seven principles of identifying security risks, such that customers can raise with providers before selecting a Cloud provider, including privileged user access, data security, recovery, long-term viability and and investigative support. In the present study, company directors believed regulatory compliance to be the most important factor (86%), but the actual location of the data the least important governing data security (64%). In relation to this, lawyers should provide advice that Cloud customers are ultimately responsible for the security and integrity of their own data, even when it is held by a service provider; however, the Cloud Computing providers accordingly should provide details of their regulatory compliance.
If the Cloud provider stores or transports the consumer’s data in or through a foreign country, the service consumer becomes subject to laws and regulations it may know nothing about. Customers therefore need to consider whether they have become subject to the laws of a specific jurisdiction, even if their data has been stored there on a temporary basis. The present (preliminary) survey found that 71% of company directors were aware of this fact. In relation to the governing law, the parties will usually expressly provide that the Cloud Computing contract is to be governed in accordance with the laws of a particular jurisdiction.
© LegalAware 2011
RBS' international expansion plans in emerging countries – a joint venture in China
The Royal Bank of Scotland (RBS) is the first UK bank and the seventh bank internationally to get approval to enter the investment banking business in China. RBS is poised to unveil a financial securities joint venture in China, to capitalise on thriving markets in the engine of Asia’s booming economy. A BBC report states that sources reveal the bank is in detailed talks with Chinese group Guolian Securities, and that the announcement of a deal could come very shortly.?? Such a joint venture would build on minority stakes that RBS already has with two Chinese financial companies, Galaxy Futures and Suzhou Trust. The tie-up with China’s Guolian Securities will allow RBS to manage share sales and issue debt in China’s fast-growing financial markets.
In 2010, initial public offerings in China amounted to around two thirds of the world’s total. RBS’ vision is to bring British, European and US companies to China, and allow Chinese investors to gain access to foreign companies, equities and debt. Foreign companies are not currently allowed to list shares in China but that is expected to change in the near future. Morgan Stanley, UBS, Deutsche Bank, CLSA Asia Pacific, Credit Suisse and Goldman Sachs have also received approval to set up securities ventures in China. A tie-up with a Chinese partner is a pre-requisite for a foreign bank wanting to enter the securities business.
RBS will have a 33% stake in the venture, which will be known as “Hua Ying Securities”. Hua means “Chinese”, while Ying means “British”. RBS wishes to be a top bank in China, and the joint venture will be based in Wuxi, Jiangsu Province, about two hours away from Shanghai. RBS has thus far declined to disclose how much the bank had invested in the venture.
RBS, 83% owned by the taxpayer after being bailed out by public money at the height of the financial crisis, has in fact been seeking a new Chinese securities joint venture for some time. The government has said it will ultimately sell its stake in RBS, but is unlikely to do so until the Independent Commission on Banking, due in September, reports its findings.
RBS is seeking to shore up its business in China, after it was forced to sell a stake in Bank Of China in 2009 for 1.6bn pounds. China is a core market for RBS in Asia as well as globally. RBS had intended to continue to invest significant resources in building their wholesale and investment banking businesses there.?? Therefore, in addition to their existing joint venture interests in Galaxy Futures and Suzhou Trust, they have also seeking a securities joint venture.”
RBS’s formidable move comes as many major international banks are focusing on China’s market in securities – tradeable financial assets such as equities and bonds – for growth.?? Analysts have said this drive had been sharpened in the wake of economic fragility in Europe and the United States. UBS, Credit Suisse, Goldman Sachs, Morgan Stanley and Deutsche Bank are among global banks with securities joint ventures in China. RBS has sold 311 RBS branches in England and Wales, and seven NatWest branches in Scotland, to Santander of Spain, while also disposing of assets such as Linea Directa in Spain, Sempra Metals, the oil and European energy business venture, and GMS, its payment processing business that includes the WorldPay brand. RBS has thus far quit retail branch banking in several overseas territories where it lacked major scale such as Taiwan, Hong Kong and Indonesia.
A successful joint venture will allow RBS to take part in that country’s thriving domestic capital markets, such as issuing debt and equities, underwriting bonds, etc. The rationale is clear. Recent data this month showed that Chinese industrial output exceeded forecasts, highlighting that the country’s economy had remained buoyant despite government efforts to clamp down on bank lending and property speculation.?? RBS has also signaled that it wishes to withdraw from retail banking in many overseas locations but in many cases it wishes to add to investment banking operations where profitable overseas.
