#4 Legal considerations for scale-up businesses with Shaun Guppy
“Better Call Shaun!” In his position as a Company and Commercial Solicitor, Shaun Guppy is unique in his approachable, understanding and pragmatic manner in the world of corporate Law.
He provides a variety of legal tips and tricks for new companies to consider when scaling-up, from key documentation to put in place at start-up level to looking towards your exit in the future. Whilst also delving into the similarities and differences of real-world Law firms verses their televised counter-parts.
This episode of The 10th Degree covers:
Building a relationship with your business advisers
Considerations when taking on employees or hiring contractors
Dealing with debt recovery
Key disputes in the sale of a company
Non-disclosure agreements and intellectual property
“Most people go to a solicitor when they're in trouble or at a stressful time in their lives. Whereas I think with company commercial law, it's more about that growth and development, and the assistance to get people to where they want to be.”
“I think that no one person can do everything themselves. And I think that's probably something we come across, especially with smaller companies, businesses, startups, is that it's your baby at the beginning and it's your business and when cash flows tight, you try to do everything yourself. When you get to a certain size. It's not always possible for you to spread yourself that thinly and it's about letting go and trusting other people be it professional advisors”.
“If you have a decent set of terms and conditions or a contract, it's about having a piece of paper to wave at someone and say, actually, this is what you've signed up to, and this is what you're in breach of, and this is the consequence. Getting this right at the beginning can save you a lot of problems in the long run.”
“The legal aspect is more of an insurance policy, terms of, if you set this all up right to begin with, then you're not going to have the problems. in the same way that your house is probably not going to burn down, but you're still going to take the insurance out just in case.”
“There are certain people who haven't done any sort of GDPR preparation and don't have any data protection policies. And I think, given the extensive fines that you can now get That's something that a lot of sales and buy teams are actually focusing on. Talk to someone about it, don't just ignore it, don't bury your head in the sand because at some point, whether it's a sales process or not, something relating to personal data, could come back and bite you.
Anthony Story 00:11
Here I am with Sean Guppy. Sean's a lawyer who works in the company and commercial team at Steele Raymond LLP. So you're interested in helping and advising different types of companies from startups and sole traders, to much more established companies as well, particularly private limited companies, partnerships, and maybe other LLP's as well. You've said that your goal is to give commercially sensible legal advice, but also support the companies that you work with in the development of their business. So I thought that was really interesting, do you think that there's a change happening in professional firms where people are beginning to define themselves less by the specific practice that they can deliver, and more by the value of the knowledge that they have?
Shaun Guppy 00:56
Yes. Business has a lifecycle and people usually come to solicitors and other professional advisors because they have an idea as to what they want to achieve, but they don't necessarily know how to achieve it, or actually, they just want the support in achieving it. I think professional advisors need to have in their mind is that whilst there is a right and wrong way, specifically from a legal perspective, what someone comes to you with is not always exactly what they want to do. And actually, I think it draws on our commercial experience as well from the clients that we've seen over a number of years as to exactly what advice we give them and where they are looking to go. But yes, you can add a little bit more if you've got that depth of experience, and you can see where the decisions that people made historically, through your past clients and actually pass those sort of little nuggets on to your future clients. I think that's where we can add more value, definitely.
Anthony Story 02:01
How often do you find that people come to you with a clear idea of what they need? So will people come to you and present what they think is a legal problem, or will people people come to you and just go, "I've got a problem."?
Shaun Guppy 02:12
I think it's a concept usually. More that they know exactly what they want to achieve, they know where they're going. But they've got existing shareholders here or they've got an investor who wants to inject funds into the company or the business - so how do they go about doing that? There's obviously a number of ways that you can do that, and it's about presenting the options to people at that stage, so there's an end goal, but actually, everything in between is probably a bit of a blur. They don't quite know how to get to that point. I think that's what I find quite interesting is seeing what different things different people want to achieve within their own businesses and the different cycles that they want to go through.
Anthony Story 02:56
So how much time do people spend building that relationship with you?
Shaun Guppy 03:03
Obviously we have new clients and we have clients we've worked with over a number of years. I think it's quite easy to build up that relationship quickly, when the advice you're giving is of specific value. And people then come back to you because originally they came to you with an issue, but actually you gave them more to go away and think about it than initially, they came in with. I think that's again, where they can see the value, and I think that's where the relationship builds from there. You can get a good rapport with clients fairly quickly, but there's not always a recurring need, especially for solicitors. People will have relationships with accountants because they need them on a yearly basis. They probably have a better rapport with their accountants, where as with solicitors there is a slightly negative connotation because most people go to a solicitor when they're in trouble or at a stressful time in their lives. Whereas I think with company commercial law, it's more about that growth and development, and the assistance to get people to where they want to be. So I think from our perspective, it's probably easier to build a relationship with clients in that way than it is maybe in dispute resolution where no one wants to have a dispute more than once in your lifetime, if you can avoid it.
Anthony Story 04:16
One of the things that I see is that companies quite often can be a little bit hesitant about committing the funds. They think, "oh, gosh, I'm going to talk to a lawyer, it's going to get really expensive and I don't know if I'm going to get value from that relationship." Is that something that you encounter a lot? Is that something you have to help people get past?
Shaun Guppy 04:34
I think there's been a shift and probably, not so much necessarily in my career, but having spoken to my colleagues who've obviously been been practising for a number of years...
Anthony Story 04:45
Are that you're saying that your colleagues are actually quite old and you're young blood coming in?
Shaun Guppy 04:49
Not at all! Would I say that? No I mean people who have been around the block then as it were. I think there is more of an emphasis on costs now, and people are more conscious of costs. Whereas before you would have a solicitor and accountant, I think people do jump between professional advisors a little bit more than they probably used to. And I think a lot of that is cost based. It's not necessarily based upon the quality of the advice it's based upon it's that actually, they can do it slightly cheaper. And like anything in life it's not always the best way to judge that professional advice. I think there's probably an emphasis on costs now, but we all do as much as we can to reduce costs and just actually making that process smooth. I think that's what people really want. If you're going to pay for advice, you want it to make your life easier not to make your life harder. And I think that yeah, you're right, there is a hesitancy to think of negative connotations of "solicitor" "costs" "time" and questioning "am I really going to achieve what I want to achieve?"
Anthony Story 06:02
Okay. Well, I wanted to ask that a lot of businesses in the digital creative and tech sector are founded by people who've got amazing ideas or a really strong opinion, and how they think things should be run. But there aren't that many people who come from a business school. So given that scenario, what's your first thought when you meet a company like this for the first time? And how big is your sense of dread? That they might have done something fundamentally catastrophic business-wise already?
Shaun Guppy 06:33
There's obviously always a chance even if you're the most clued up businessmen in the world that you've done something. I think, again, there are a lot of people who will look the end result as their driver towards "I know exactly where I'm going." But everything in between potentially they don't do the right way and I don't necessarily think that that is unique to a specific sort of person. I think it can happen wherever. You do get people who are really really good at business and not necessarily great at delivering the product or the service that they are delivering. And you also get people who are really, really good with the hands on production and all of that sort of stuff but the business sense maybe isn't there. But I think that's where your professional advisors and not just solicitors, but also accountants, tax advisors, everybody should be able to help if you've got a decent set of advisors around you. I think that no one person can do everything themselves. And I think that's probably something we come across, especially with smaller companies, businesses, startups, is that it's your baby at the beginning and it's your business and when cash flows tight, you try to do everything yourself. When you get to a certain size. It's not always possible for you to spread yourself that thinly and it's about letting go and trusting other people be it professional advisors or employees which is a big one. When do I take on employees? Who do I take on? And can I trust that person to deliver the service or the goods in exactly the same way that or the way that I want them to? And I think that's the probably the biggest challenge for a lot of startups.
Anthony Story 08:15
So when companies get to that stage and they come to talk to you, is there a particular thing that people have admitted to doing that you see most often? You talked about employees is it maybe the contracts aren't that tight?
Shaun Guppy 08:30
So focusing on employees initially, it's contracts. It's things like staff handbooks, it's thinking about pensions, there's obviously a lot of law and regulation around around employment and employment rights. And you do find people who have taken a one page contract or actually no contract, they've just employed someone. And they should have really taken steps initially to put that documentation in place. Again, I think that's cost driven. It's a thought of "actually I could probably save on some costs now by doing it myself." And sometimes unfortunately, that leads to greater cost further down the line rather than actually putting in place what you need to put in place or rectifying a problem. Another thing that I think people don't necessarily think about that everybody goes into business, presumably to make money and be paid, and contractual relationships are a big one, terms and conditions, downloading something off the internet, it's not a one size fits all - how you operate your businesses is not necessarily how someone else operates there's.
Anthony Story 09:31
I wanted to ask you about that - what is the impact of the freely available templates on the internet? Can they lead to more problems than they solve?
Shaun Guppy 09:41
Definitely, because it's a case of, one size does not fit all. And "how you deal with your order process," "how you deal with when the contract comes into place", "is it a recurring contract," "is it a one off contract?" One set of terms and conditions will not cover you for all of those things and everybody has different business models and you need to adapt those for your specific business. Payment terms are big one - I issue an invoice and you pay it within 14 days. But what happens if they don't pay within 14 days? Your enforceability then in terms of "Do you want default interest?" "Do you want to be able to cease to provide the services?" If it's an ongoing contract, you may say, actually, I'm going to put your account on stop. You need to really address all of those things in those terms and conditions, but not every business will operate in that way. So templates are great, as a starting point but you really just need to focus on actually, "what am I doing?".
Anthony Story 10:40
Well, while you mention it, that's a really big point isn't it that cash flow is critical for everybody. And late payment is a scourge for a lot of people, obviously. Even if you get those conditions in place, and the contract is right, how do you go about enforcing that because a lot of people feel like they don't have the money to be able to enforce that in the first place?
Shaun Guppy 11:01
No, I think actually having those terms and conditions and those contracts in place, makes it easier. So personally, I don't deal with enforcement, but my colleagues in debt recovery, if they've got a decent set of terms and conditions or a contract, it's having a piece of paper to wave at someone and say, actually, this is what you've signed up to, and this is what you're in breach of, and this is the consequence of you not having paid on time. It's having the consequences that usually then it doesn't require as much input from a legal perspective or an operational perspective. Now, a lot of people will deal with debt recovery in-house, being able to actually point to provisions within your agreement that have knock on effects for your customer or client is a big win in terms of actually getting them to pay. If you've not really got much in terms of a stick to beat them with then there's no real incentive for them to pay on time and they'll continue to flout your credit terms. So it's definitely about making sure you've got that in place.
Anthony Story 12:02
That's really interesting that you've got your own Debt Recovery Team in house?
Shaun Guppy 12:06
Anthony Story 12:06
I think that some of the companies who we work with would be worried about two things really. One is that they're going to spoil the relationship with the client that they have. And if they start demanding, being paid on time, that they may not get any more work from them. That obviously leads to a question of, well, do you want more work from them if people aren't going to pay and they're going to stretch? Are they actually going to be a distraction from you running your own business? And I think the other thing is, a lot of those companies would hesitate before coming to a lawyer because they want to try and sort out amicably if they can, but I suppose if there's a very professional service in place, and maybe if they've got the relationship with you sooner, that they feel that it's all been set up in a very professional basis to begin with. The fear is "we're quite a young company, all of this is going to cost money, is it going to be worth it?" In a way it only becomes worth it if it all goes wrong!
Shaun Guppy 13:03
Yeah! I think the problem is, putting these things in place when it has gone wrong, is too late. And that's true of a lot of things that we see is that we are last to the party, and in a lot of cases people come to us with problems, rather what they're looking to do in terms of being a start up for example "I need a set of terms conditions" or "I'm concerned about x, y, and z". If you address that early on, your then not going to your solicitor with a problem that they have to try and rectify and instead you've got a problem that actually is within their skill set to actually enforce those payment terms or deal with it in the way that they and you initially envisaged. So, yeah, I think also in terms of things like debt recovery and getting paid it's important. There's a certain commerciality to it as well, in terms of, like you said, you don't want to scare your customers or clients off. If you're a startup and it's your first customer, the last thing you want to do is upset them. We're probably not a last resort because we don't go all guns blazing on a debt recovery. It's not the way that we would try and play things. But there is also a commerciality to it and just having a conversation and understanding because actually, there may be a reason why they're not paying you on time. It's not just actually my credit terms are 14 days, 30 days, whatever it may be, they haven't paid, oh, well, let's enforce against them. It's sometimes actually just finding out why they're not paying.
Anthony Story 14:36
So is that the approach that you would take? Would somebody pick up the phone first, rather than just sending a final demand letter through?
Shaun Guppy 14:43
I think that opening communication with a debter is key - it's that understanding. There's obviously a formal basis upon which we have to go through things from our own regulatory perspective, especially if people are instructed by other firms of solicitors and it becomes contentious debt recovery, then there's obviously a slightly more rigorous process you have to go through. But I think, ultimately, if you can go about it in a fairly relaxed way that actually leads to a better outcome for everybody really, it means that we don't have to spend as much time chasing a debt, it means that the debter knows where they stand. And actually, our client knows exactly what the situation is. And it's understanding, is there a problem there that means that they're likely to default on all payments? And again, it comes back to do you actually want their work and do you want them as a continuing client? Or actually is it a one off, they're struggling with a specific aspect, and you can then address that. It's understanding I think, it's not as black and white as they haven't paid, let's do something.
Anthony Story 15:46
So the way you're painting that, makes it sound like actually, the legal aspect is more of an insurance policy, terms of, if you set this all up right to begin with, then you're not going to have the problems. And that rephrases the issue. So you need to be seen as a step to take up front, which is going to prevent you from having problems later, the chances are you aren't going to have problems later, in the same way that your house is probably not going to burn down, but you're still going to take the insurance out just in case.
Shaun Guppy 16:17
Exactly, I think that's a good way of looking at it and a good way of it dressing up is actually that it is that last resort. It's if you have that commercial conversation, and if you are still unable to get to a point where the debtor pays or whatever you're looking to enforce, actually, you've got that formal recourse then. Whereas if you don't have that, you've completely lost your leverage, and I think that that's a bit that's a big thing.
Anthony Story 16:43
Yeah, and then from a commercial point of view from the legal firm how do you price that? So let's take the insurance analogy, where you're paying a regular premium no matter what happens and then you get a claim. Is there any way that a legal firm would think, "okay, well, let's try and even this out, let's not have a big cost up front, whilst we're getting all the contracts together, and they're all those initial fees, but, why don't we do like a three year contract and see how we could spread that more widely? And the chances are, we don't do very much in year three, but the cost will be split. Have you seen anything like that happen?
Shaun Guppy 17:23
Not really, I think the way that the legal profession works mainly is on a matter by matter basis. And I think that comes down to our regulation as well, to a certain degree. We've got to be quite a transparent profession. In terms of our regulator, we've got to send certain information at the beginning, we've got to give fee estimates. And I think it's difficult to do that over an extended period of time, which is why it comes down to really a matter by matter; "this is what I'm looking to put in place, that's what you're instructing me to do and this is how much I think it will cost." But ultimately, we aim to be as transparent as we can. But I've seen it with some of the larger firms and city firms, they are bringing out product packages, then startups that are a fee that include certain documentation. I question how tailored that is to specific clients. I think again, it comes back to that template documentation. It's not a one size fits all, but it's a very, very good starting point. I think to really get the most out of your advisor, you really need to sit with them and actually go through what you are doing on an in depth basis, because that's the only way that you can really tailor it to exactly what you are doing. But there may well be a move in the profession to offer something a little bit more like that. There's certainly appetite, I think amongst startups and people who have maybe cash flow restrictions or something along those lines. The profession is always fairly slow to react to these things, but it's definitely something we've seen come through a little bit more recently.
Anthony Story 19:00
So we're going into quite a lot of depth in a particular area, which is probably more than I expected, but it's really interesting because actually, these things really matter to some of the people. So just to redress the balance a little bit, you've talked about the consultancy side that you're involved with, and that it's not just all about the legal there's the kind of the whole support side. And obviously, consultancy is strongly based on good relationships so I think we should have a little explore about Shaun Guppy, the consultant rather than what you know about the law. So I think there's some very important questions that I've got here and we'll kind of jump around a little bit. Okay, so question one: do lawyers watch TV shows about other lawyers?
Shaun Guppy 19:52
Yes. And they're very frustrating.
Anthony Story 19:54
Okay, very frustrating. Alright, so I need your top three shows and why?
Shaun Guppy 20:04
Top three about lawyers?
Anthony Story 20:07
Top three that you like about law. I mean I can give you some clues if you like?
Shaun Guppy 20:11
Gone on then.
Anthony Story 20:12
Okay give me a 1 to 10 on The Good Wife
Shaun Guppy 20:17
See I'm not a big fan of The Good Wife
Anthony Story 20:20
There's going to be some very disappointed people. Why is that? What disappoints you about The Good Wife? Is it the acting?
Shaun Guppy 20:31
You don't ever like to say it do you? I think the problem is everything is over dramatised in every single way in any sort of legal show - it's a drama, isn't it, ultimately it's got to be entertaining.
Anthony Story 20:47
I think the important thing to know is do you have a kick-ass researcher like Kalinda who can go in and sort stuff out for you instantly in the moment, in a heartbeat?
Shaun Guppy 21:13
Unfortunately not! That would be great, wouldn't it?
Anthony Story 21:15
That would be great. Someone who can just come and sort it all out and hack into any system that they like.
Shaun Guppy 21:21
That would be pretty cool.
Anthony Story 21:22
Okay, let's try another one - Suits?
Shaun Guppy 21:26
Suits again, is Americanized.. Which is fine, which is brilliant. But I don't know how one legal practitioner knows so much about family law and commercial law. I just don't know. He's fantastic. Harvey Spectre is amazing. But I don't know how he gets to the point that he gets to, he's an interesting character.
Anthony Story 21:47
Do the legal team at Steele Raymond have the ability to be able to look at a contract in two seconds and be able to digest everything on that page?
Shaun Guppy 21:56
Anthony Story 21:58
I thought that was good. Okay, The Good Wife or Suits which would you rather watch?
Shaun Guppy 22:04
I'd rather watch rather watch Suits. Yeah, I think it's a little bit more accurate. I know I've just slated them for how broad their legal knowledge is! I think it's a little bit more reflective probably especially of city lawyers, long hours, all of that sort of stuff.
Anthony Story 22:29
Okay, well, then an absolute classic: Better Call Saul?
Shaun Guppy 22:35
We're now straying into completely different areas now aren't we? Better Call Saul.
Anthony Story 22:41
Is that your experience as a lawyer? Have you ever got anywhere near that?
Shaun Guppy 22:44
With the car that doesn't quite start? The mug is great. I haven't got my face on a billboard yet. I need to do that at some point. I don't know whether the marketing budget will stretch to that. I'm getting a nod, so we can go for something along those lines.
Anthony Story 23:03
All right. Okay. So let's take a step back. So the road success, it's fraught with potential legal dangers. And I thought why don't we have a look at this from the perspective of, for want of a better expression, the perspective of a spectacular failure opportunities and work our way backwards. So the holy grail of most companies is to sell or go public for a vast sum. So the founders and the long term workers retire, buy a yacht and live the dream, which unfortunately, much there and everyone else's surprise often means drinking too much and becoming very bored and possibly boring. So that aside, I know you don't deal with people like that because you're reputable firm with good people, of course not. So without betraying anyone's confidence, can you tell me some of the big issues that you've come across when you get to the point where it's time to sell the company?
Shaun Guppy 24:08
We had one where we had a lot of supercars within a company that we had to extract - that was an interesting transaction. So they were personal cars that were purchased through the company. So there's a there's a purchasing process at an exit where essentially the sellers wanted to retain their cars. So we have to extract those from the company obviously in a tax efficient way, but in a way that is not just extracting them for the sake of extracting them. So that was quite an interesting transaction.
Anthony Story 24:41
Assuming it wasn't a car dealership, and they lost the product?
Shaun Guppy 24:43
No, no, it wasn't. But the issues that we come across more than anything is probably documentation really. It happens on occasion where someone picks up the phone and catches you off guard and makes you an offer and we've had that happen. But a lot of people will be gearing up, they will have in their sights an exit at some point, and it's certainly worthwhile at that point, stepping back and taking stock and having a look actually, most people will consult accountants most people will have corporate finance advisors, but actually, lawyers at that point can have a very big part to play in terms of actually almost doing a "dummy due diligence exercise". For example, this is a standard set of inquiries we would see and you can then identify, playing devil's advocate, actually, okay, the information you've given me, this is what I don't think you have in place at the moment. This is what doesn't work. This is what does work. This is what you do really, really well and we should emphasise in a in a due diligence process. But it does highlight the gaps and it means you can address those before you get to a sales process. Once you're there it's slightly too late and it means that a buyer is going want increased warranty and indemnity protection and you're actually not going to have the clean break potentially you wanted from the company.
Anthony Story 24:46
What are the most common things that when you get to that position, that will make people say, why didn't I do this five years ago?
Shaun Guppy 26:16
I think the most common thing, actually at the moment is data protection. Last year, everybody probably went nuts with GDPR. And I think there was a statement issued by the Information Commissioner's Office that they were going to be fairly relaxed about GDPR compliance in the first instance. So I think as a firm gearing up for GDPR coming into place in October, November time, we had a few inquiries as it got closer and closer, people were getting more and more fraught and we were getting more inquiries coming through. There are certain people who haven't done any sort of GDPR preparation and don't have any data protection policies. And I think, given the extensive fines that you can now get That's something that a lot of sales and buy teams are actually focusing on. So we've seen that a lot fairly recently.
Anthony Story 27:08
Do you think in terms of trying to resolve that that's something you come and talk to a lawyer about? Or is that something that you've talked to a specialist GDPR agents about?
Shaun Guppy 27:15
Either i think it's just important to take the advice. Lawyers are probably best placed in terms of the actual regulations and the law, in terms of those policies that you need. There are some specialist GDPR agencies and people out there who can give you that support. But I think the important thing is talk to someone about it, don't just ignore it, don't bury your head in the sand because at some point, whether it's a sales process or not, something relating to personal data, could come back and bite you. And I think, again, at that point, it's too late to put it right for that specific issue. So it's addressing it as early as you possibly can.
Anthony Story 27:54
What about share ownership? When equity's been divided years ago with people liberally sprinkling shares all over the place at the early stage or maybe somebody owns all of them or there's a 50-50 split that can often go horribly wrong. What are your thoughts around that?
Shaun Guppy 28:11
Share ownership is an interesting one, specifically around statutory books and registers. So that's a set of books essentially, that records you who your shareholders are - so allotment transfers of shares and who they are at the moment. A lot of companies don't know where they are! Historically, maintained by solicitors and accountants, but where people potentially shift between professional advisors now they don't necessarily take those books with them. So we find ourselves trying to reconstitute a lot of statutory books from Companies House records. Share buybacks, are another point that comes up quite a lot on sale transactions specifically. If you don't do a share buyback which is essentially where a company purchases it's own shares out of its profits. When you don't do that fully in compliannce with the Companies Act, it's a void transaction. And we do sometimes have scenarios whereby you've had a shareholder 10 years ago, who did a company share buyback, it was a void buyback, technically those, that individual still holds those shares. It's sods law that you no longer get on with that person or know where that person is. And it's therefore very, very difficult to rectify that at that point. So yeah, again, understanding who your shareholders are. Also subscriber shares, so when you initially incorporate a company and its incorporated with one subscriber share, we see it fairly commonly that that subscriber share has somehow gone missing in terms of its not been taken forward in the in the share numbers.
Anthony Story 29:46
What is a subscriber share?
Shaun Guppy 29:48
So it's when you apply to register a company at Companies House, you have to have at least one director and one shareholder. So most people will incorporate a company with one shareholder holding a single share that is your subscribers share. Then you allocate further shares out of that. But people sometimes forget that they had that one subscriber share it's forgotten about, it was part of the incorporation process doesn't really matter, let's allocate another hundred shares and they're moving forward a record that they've only got hundred shares in issue and in fact they've got 101. Which is fine where you've had someone who has owned the company all the way through there's there's no risk there but where the company changes hands or you've had a lot of share transfers, that can be problematic and a buyer can certainly be unnerved where they can't track through who the shareholders are, ultimately, they want 100% of the shares. And even if there's one rougue share that's out there doesn't always bode well for a seller
Anthony Story 30:47
And do you sometimes deal with those where a company's got a 50 50% split? Sometimes one person wants to sell and the other person doesn't want to sell. How do you start smoothing out of the waters in situations like that?
Shaun Guppy 31:01
So that's a difficult one. You don't get married to get divorced. You don't go into a 50-50 to fall out with the other person. But unfortunately it does happen, and people have different business ideas and different ways of running businesses. It's not something we see very, very often, but it does happen. But I think when you go into anything like that, you've got to think about the potential issues that you may face in the future. And that can all be covered off in legal documentation, through a shareholders agreement or partnership agreement if you've not got a limited company, and that just regulates the relationship between those parties and usually will provide some sort of dispute resolution mechanism, which can have a number of end results, it can say exactly what you want it to say. But ultimately will usually entail a number of options for one party to buy the other out. Or actually if you can't get to a point where either of you wants to buy the other out, it's a forced sale of the company and then neither party really has much choice at that stage. So it's carving through that issue early doors.
Anthony Story 32:09
One of the things that I've heard advised is get somebody else involved and just give somebody else a percent. So there's not a 50-50 split ever, somebody can always make a casting vote.
Shaun Guppy 32:19
Yeah, so again, there's obviously two levels - director level and shareholder level. Director level is a majority of the directors so that can help sometimes if you only have two directors as 50-50 shareholders bring in someone who is who is slightly impartial. For example a non exec who can actually give you some advice to help you break those deadlocks if they arise. Shareholder levels is slightly different in terms of, who would you take that 1% away from in that 50-50 split? The better way to deal with it is probably in a shareholders agreement where you actually retain the ownership of your shares, you're not saying giving away any sort of decision making power to someone else. But actually your relationship as a partnership or a 50-50 shareholding is fully regulated. And everyone knows from day one, actually what's expected of them.
Anthony Story 33:13
Okay. I've got so many questions I want to ask you, but there's only so much that we can dissect the law in one session and we haven't got a huge amount of time. So, I'm going to come back and try a few quickfire questions. NDA's - are they worth the paper they're written on?
Shaun Guppy 33:30
They're worthwhile having definitely. It depends what you're using them for and on the information you're sharing. But yes, they are worth the paper they're written on, they get they give you that protection. It's an insurance policy. It puts obligations on people to not disclose the information that you are giving to them. So yeah, hundred percent I would recommend NDA's in certain circumstances.
Anthony Story 33:55
What about when people you really want to get advice from refuse to sign them? Like most entrepreneurs who give advice or mentoring, they won't sign them because they'd just be bombarded with them, from a startup idea.
Shaun Guppy 34:06
Yeah. It's quite an interesting one that because if you're not going to use or look to profit from the information that someone else is going to give you, I think from a legal perspective, we probably struggle with reasons as to why you you wouldn't necessarily sign one. I appreciate it maybe an administrative burden, but actually, if that is the realm in which you are operating and the services you are providing, I would say that actually, it's protection for your client and if your client feels that they need that, then it doesn't seem to be any reason why you wouldn't necessarily sign that.
Anthony Story 34:42
I think the flip side is that quite often the idea is seldom as unique as the person having it thinks it is, and you've already seen something like that before. So what position are you left in if you've suddenly signed an NDA, you can't talk about something but actually that ideas already in the public domain.
Shaun Guppy 34:57
But if it's something that's in the public domain, then it's not confidential information that could be protected by an NDA in any event.
Anthony Story 35:03
It may not be in the public domain, but it would be kind of be in your domain atleast because you if you work with a lot of startups, the chances are two people are going to have a similar idea.
Shaun Guppy 35:11
Yeah, I can see that point. I think it's then actually scoping that NDA in a specific way. It's to ensure that actually, the client that you are dealing with, you've got a rough idea of what their idea maybe it's actually scoping it to protect the unique elements of that idea rather than just generic information that you may have come across before.
Anthony Story 35:31
Okay, so another quickfire question! Copyright. Can you send yourself an idea in a sealed envelope and post it and does that mean that a thing?
Shaun Guppy 35:40
Intellectual property law is just a minefield of regulation and laws really. Copyright's an interesting one. It arises as soon as you come up with a creative idea, as soon as you put pen to paper, as soon as you draw something, the copyright rests with you. Now, if you are looking to pursue someone for a copyright infringement, it will be based on evidence and as silly as it sounds, anything that's date stamped or anything that's proof as to when the idea was created and who created it, can't hurt. It will add to your defence or actually to to an action that you're bringing. So if you write a song, sing it in a mirror, record it. You look like a singer Anthony.
Anthony Story 36:31
I'm singing in the mirror all the time.
Shaun Guppy 36:32
Oh, there we go. Then it shows actually it was your creation. A date stamp and time stamp and anything like that is really, really useful when it comes to some sort of copyright infringement.
Anthony Story 36:44
Well seen as you brought up singing in the mirror, whether they're barristers or not, do lawyers practice closing speeches in their own bedrooms as if they were talking to a judge in the way that an actor will always practice their Oscar acceptance speech, just in case?
Shaun Guppy 36:59
I haven't personally but I probably know some people who have. So yeah, no, not something I've personally done, but I'm sure there are bound to be some people out there.
Anthony Story 37:08
I think it's just a question of time.
Shaun Guppy 37:14
When I get that billboard, I might start my start practising in the mirror,
Anthony Story 37:18
Signing a contract when drunk? Can you get out of it?
Shaun Guppy 37:23
Good question, prove that you were drunk at the time?
Anthony Story 37:26
Because that could be a real problem for all those people who are signing contracts in Cannes and MIP and kind of those TV and film festivals late at night.
Shaun Guppy 37:35
Again, I don't think there's an easy answer for that. You can sign one if you're drunk, just to try and run a decent defence to it.
Anthony Story 37:45
Okay, signing a contract under duress. What is duress? How do you prove duress? Is duress just because somebody told you to or do you have to be actually strapped to a chair with a gun in your head?
Shaun Guppy 37:56
There doesn't need to be any tape involved. Duress is basically being under pressure to do something. So be that physical pressure, mental pressure or just not having something explained to you correctly. I think this is where it's important to seek advice, when you don't understand things. Because duress arguments are not the easiest to run in terms of actually, again, it comes down to a proof point. And how can anybody prove that they were under duress? Again, it comes back to how can you prove that they weren't. And this is where, especially with legal documents will get independent legal advice will send people off to actually get explained to them by someone who is completely independent. That overcomes duress points. But yeah, it's a very, very difficult thing to get out of. So if it's something you don't understand, don't sign it, is the message.
Anthony Story 38:43
So back to Shaun Guppy, the consultant. Do you have any dogs?
Shaun Guppy 38:47
No. I have two cats.
Anthony Story 38:50
Are you married?
Shaun Guppy 38:51
I am indeed. Yes.
Anthony Story 38:53
Excellent. And as a solicitor did you make your wife sign a prenup agreement just because you could?
Shaun Guppy 38:59
My wife is also a solicitor.
Anthony Story 39:01
Did she make you sign one?
Shaun Guppy 39:03
No, no, she didn't actually no, we didn't we didn't go down that route.
Anthony Story 39:08
That's romantic. That's nice.
Shaun Guppy 39:10
Anthony Story 39:12
I just wondered if because you could, it's like not that you wanted one, but going, "Hey, I've got a firm of solicitors I may as well use them"
Shaun Guppy 39:18
We've got nothing to protect, but let's sign them anyway!
Anthony Story 39:20
Okay, so then lastly because we're running out of time. You came to Bournemouth through university is that right?
Shaun Guppy 39:29
I did. Indeed. Yes. I grew up in Yeovil for 18 years. I can't tell you why I wanted to be a solicitor but as far back as I can remember that's what I wanted to do. I had quite a focused mind in terms of where I wanted to end up. I haven't got any family in law. Law again, cynically is not always necessarily what you know it sometimes it is who you know, it's having those connections, I think that's true in in a lot of walks of life. So I ended up in Bournemouth because Bournemouth University was one of the only Universities in the UK at that point to offer a placement year as part of their LLB course and I like Bournemouth as a place so I did my placement at Steele Raymond, got my training contract off the back of that so it shows that that whole placement scheme does work and I've stuck around ever since.
Anthony Story 40:19
Were you tempted to live elsewhere or did the lure of the beach keep you down here?
Shaun Guppy 40:28
When you go into a law degree and you think you may want to be a solicitor or a barrister, and you haven't decided quite where you want to end up, I think London is where everybody expects you to go. And I think there's a certain draw when you're younger that that may be actually where you where you want to end up.
Anthony Story 40:42
I think that's probably why you like Suits more than The Good Wife.
Shaun Guppy 40:45
Anthony Story 40:45
You want that busy, kind of, "yes, I'm here in the corporate law world!".
Shaun Guppy 40:48
Definitely. I think work life balance in Bournemouth is obviously slightly better than it is in a London solicitors firm. We haven't got sleeping pods in our office. We haven't got a hairdressers, we haven't got a gym so it's nice when you've got a nice summer's evening and you can get out and have a walk by the beach and go home and see your cat, and do whatever you want to do. But I think once I'd secured my training contract in Bournemouth, I knew that Steele Raymond was where I wanted to be. Definitely in the short term, and I've been back there now for a good five years and I love it as a firm. It's got a fantastic reputation locally. So no, I haven't got any desires to go anywhere at the moment. But we'll see, never say never. But no, I'm enjoying Bournemouth enjoying everything that Steele Raymond has to offer me as well.
Anthony Story 41:38
Shaun, thank you so much. Thank you for putting up with my very rude questions. It's been really interesting to talk to you. I really like hearing the way that your mind thinks through some of the problems as well and it's going I'm really glad that your solicitor and not me because my mind doesn't work in that same way. So that's really good.
Shaun Guppy 41:55
We're all good at different things aren't we. That's what makes us unique.
Anthony Story 41:59
Thank you so much. It's been really good to chat with you.
Shaun Guppy 42:02
Thank you for having me.