Commercial Awareness Update – W/C 22nd March 2021

The round-up of the stories that a budding Student Lawyer should be aware of this week. Sign up here to get these updates in your inbox every week.

Lula Hints at Presidential Plans following Lava Jato Annulment

Article by Livia Devereaux-Finnamore (PGDL Student at BPP University)

In 2018, former Brazilian president Luiz Inácio Lula da Silva was sentenced to 12 years in prison following allegations of money laundering and malfeasance by the now-dissolved corruption probe, Operation Car Wash (or Lava Jato). The 4-year investigation deemed the largest corruption inquiry in the country’s history led to the conviction of 174 people, including dozens of politicians, and the recovery of at least 3.28 billion reais (approximately £490 million). It centred around Brazil’s majority state-owned petroleum corporation, Petrobras, in which Lula served as director and allegedly took part in a multi-billion-dollar kickback scheme, awarding contracts at inflated prices and receiving a portion of the windfall in return.

However, on the 8^th March Supreme Court judge, Justice Edson Fachin, quashed Lula da Silva’s convictions on technical grounds and he was released from prison after serving just 580 days. Lula was previously convicted by the federal court in the southern city of Curitiba who, he ruled, do not have the appropriate jurisdiction given that Lula was resident and president in Brasília at the time of the alleged crimes. In his ruling, Justice Fachin ordered that the former president be retried by the Federal Court of Brasilia.

This ruling, assuming it is upheld by the full court, restores Lula’s left-wing political rights and clears the way for a presidential election battle against the far-right wing incumbent President Jair Bolsonaro in 2022. Bolsonaro, one of the most vocal critics of Lula’s left-wing Worker’s Party, has faced wide public criticism for his handling of the coronavirus pandemic (or “little flu” as he named it) and is expected to face strong challenge in a presidential election against his political nemesis, Lula.

Despite his role in corruption and no vindication of innocence, Lula arguably remains the most popular politician in Brazil – he was once called “the most popular politician on Earth” by Barack Obama. In a recent poll by research institute Ipec, 50 per cent of those interviewed said they would vote for Lula (if he were to run) in 2022, compared with 38 per cent for Bolsonaro. Lula’s time in office was characterised by social justice, economic prosperity and relief to Brazil’s most impoverished. He has refrained from officially announcing his intentions of presidency in 2022, but on Thursday attacked Bolsonaro stating “[He] does not know what it is to be president…I want to create a more just world, a humane world” and criticised his flippancy of the COVID-19 pandemic urging “Do not follow any imbecilic decisions by the president…Take a vaccine”.

Providing Lula remains free of conviction until the candidacy registration date in August 2022, there is certainly expectation of a tumultuous election battle between him and his populist right-wing competitor in the near future.

(You can read more on this story here, here and here)

Zero Time to Waste: Is the Legal Sector All In?

Article by Fozia Iftikar (Final Year Law Student at the University of Leeds)

The Net-Zero hype

Sustainability: that buzzword becoming increasingly significant across the globe in a desperate bid to save our precious planet. Organisations and companies in a multitude of industries are upping their game when it comes to being more environmentally friendly – as part of their efforts to become more sustainable, retail giant Tesco recently announced that bread bags and crisp packets would be recycled in stores. Evidently, sustainability has become a hot topic within the realms of the retail sector – studies in 2019 revealed a whopping 65% of respondents avoided purchasing single-use plastic. So, what is the big deal with recycling and clamping down on plastic usage?

It all forms part of the bigger picture: the UK Government’s scheme to attain ‘net-zero’ status by 2050. Net-zero refers to reaching a balance between the number of greenhouse gases which are released into the atmosphere and the amount which are subsequently removed from the atmosphere. This is due to the devasting impact greenhouse gases have on our climate – including disruption to food supplies, wildfires and ah yes, those heatwaves in summer that felt like an attack from outer space? Potentially due to extreme weather caused by climate change.

Globally, six countries (including the UK) have implemented legislation to be net-zero within the next thirty years and the likes of Spain, Chile and Canada, amongst three other countries have proposed legislation to do so. Industries around the world are striving to reduce their carbon footprint – with big tech giants such as Microsoft showing monumental progress and aiming to hit their net zero targets by 2030. This begs the question; just how much is the legal industry doing to save the environment?

The larger the sustainability efforts, the larger the recognition

Slightly over a decade ago, the Harvard Business Review classed sustainability as “an emerging megatrend”. This certainly rings true for law firms, who have observed sustainability to be an imperative link for the growth and success of their businesses as the sustainability shift has progressed. Not only has considering environmental and social impacts of their practices been a focal point for clients, but also for potential candidates who wish to be part of firms. International law firm, Latham and Watkins, commented on clients considering whether an organisation has implemented sustainable practices in choosing who to liaise with. In addition to this, the surge in concerns over climate change have come to light in studies by Forbes in 2019; discovering that 77% of individuals wish to learn how to live in a more sustainable manner. Consequently, now more than ever, potential employees pay great attention to how much emphasis a firm places on sustainability when deciding where they would like a career.

How the legal sector is actively working on becoming more sustainable

A plethora of law firms, from high-street to international status, have exhibited their commitment to becoming more sustainable by joining established networks and publishing annual corporate social responsibility reports to show how they are actively benefitting the environment. Womble Bond Dickinson is one of many firms to join the Legal Sustainability Alliance; an initiative chaired by Norton Rose Fulbright’s environmental specialist lawyer, Caroline May, to assist firms in committing to become Net Zero.

Day-to-day regular practices have become the norm for many firms, such as:

• Recycling paper, glass and batteries – the shift to online working has promoted the usage of less paper as computers have allowed for increased efficiency when handling hefty documents
• Utilising less electricity and water
• Endorsing public transportation to reduce carbon emissions and “walk to work” days
• Communicating through video conferences to reduce airline and train travel – this has become the new norm during the pandemic

Should lawyers be legally obliged to carry out environmentally beneficial practices? 

In a Big Question survey by Law.com in 2020, 60% of 90 lawyers affirmed that law firms should be “legally required to improve” their sustainability practices. In order to preserve natural resources and minimise damage to wildlife, it could be said that all industries should hold collective responsibility. The legal sector in particular should lead the way, as the size of the global legal services market is continuously growing, with market revenue reaching £37 billion in 2019 in the UK. Lawyers have a unique position of authority and trust and are consistently renowned for their innovative thinking. By passing the boundaries of offering innovative solutions to clients on large-scale projects, they should place the same passion into their handling of environmental affairs, to create a safer and healthier planet for all.

Considering that many firms are improving their sustainability efforts already in the modern day, it could be seen as merely symbolic as opposed to effective to implement legislative rulings to abide by. Furthermore, high-street firms may struggle to find the capital to invest in new methods of managing operations. That being said, there are daily practices, as highlighted above, which the overwhelming majority of individuals can carry out as part of routine to be more sustainable.

Future implications

Ultimately, the success threshold of attaining sustainability will not rest solely on how quickly the country works to become net-zero by 2050, rather, it will be based on collective efforts and responsibilities to educate individuals as to the importance of sustainability and upholding these practices as time goes on. Law firms and legal organisations should use their influence for the greater good of society and continue to make a step in the right direction to ensure the longevity of natural resources and in turn, the success of future generations.

BaFin Looks for Reforms Following the Wirecard Scandal

Article by Advaita Kapoor (3rd year B.A. LLB (Hons.) student at Hidayatullah National Law University, Raipur, India)

After the outrageous and infamous scandal of Wirecard, an opportunity at reform is being explored by Germany’s financial regulator BaFin. It is a move not only to inquire more into the corporate fraud but also bring considerable changes to the regulatory framework, and help boost regulation and governance across the European Union.

What does the reform bill entail?

The reform bill is a seven pointer framework, essentially aimed at increasing control and intervention into the system to make a ‘focused oversight body’. Until now such oversight was fragmented into separate bodies for different sectors, but with this reform, a uniform single body preventing any company from slipping out the net. It will provide BaFin increased control rights and create a special financial task force for carrying out forensic investigation and audits of companies suspected of fraud and other financial irregularities. It provides as the right to inform the public at an earlier stage about the actions of these companies regarding their balance sheet control. It aims at giving more investor and consumer protection.

The proposal also contains separation of the auditing and consulting services, especially for the Big Four accounting firms. It requires companies to switch their external auditors after 10 years.

Are the reforms enough?

The Finance Minister Olaf Scholz, exclaimed that the reform plan would make BaFin more powerful, rigorous and effective, however, the same is not short of criticism. The MP’s have criticised it for being inadequate and not addressing independence of the finance regulator, which is the most important aspect. It also does not address the serious shortcoming in financial regulation consisting of incompetency, lack of independence and transparency. The plan has a narrow focus on auditing and accounting, not making any significant changes in the system.

You can read more here and here.