‘Not my problem’ – undermining personal and corporate social responsibility

DRIVING BY

I read a BBC article ‘Driven to his death: Mystery of motorcyclist body on M4’ about a motorcyclist who was killed by a man later convicted of causing death by dangerous driving and attempting to pervert the course of justice.

What struck me in particular was one paragraph in which it was reported that a couple had seen the motorcycle “spinning clockwise on its side in the near distance.” The woman passenger “screamed at her husband who swerves to avoid it, the bike still spinning as they pass.” There is no suggestion that this couple reported the incident to the police.

The article does state, earlier in the piece, that a member of the public called the police saying “There’s a motorbike right against the central reservation… It’s actually on the floor. But there’s no sign of the driver.” The inference I draw, perhaps wrongly, is that the couple did not report the incident. It was Christmas Day, a little before 6pm. It is, unfortunately, likely that they decided not to call the police, perhaps because the driver thought he might be over the limit; or more likely because they decided that it was not their problem and did not want to ‘get involved’.

COMPROMISE AND COMPROMISED

Compromise is essential if disputes are to be resolved and allows business and personal relationships to continue in one form or another, or to have closure. Another use of ‘compromised’ is to “reduce the quality, value, or degree of something, such as one’s ideals” (Freedictionary). It is this second meaning that too often results from the first.

Compromise agreements are common in the context of employment where an employment dispute is settled, usually on the basis of a payment and commonly with a gagging clause preventing any disclosure by either party, including of the existence of such an agreement. There have been many recent examples thrown up by the #MeToo movement in which individuals report their regret at having accepted hush money and the fact that if they had spoken out a perpetrator might have been stopped sooner.

CORPORATE SOCIAL “RESPONSIBILITY”

I have seen far too many cases in recent years of deals being done by major corporates that served their interests alone, protecting individuals and their brand from ‘reputational damage’, and allowing a situation to continue that they could have brought to public attention. Is it right that organisations that make much of their CSR efforts nonetheless turn a blind eye to wrongdoing with the result that it is allowed to continue to the detriment of others? In my view it is not.

EROSION OF VALUES

How often do we hear the question ‘how did they get away with it for so long’? The reasons are all too human and reflect the corrosive impact of social media and other modern means of public humiliation and scrutiny, which do not deter those in power, but rather those who might call them out. Most will not put their heads above the parapet for fear of the consequences. Most will look and walk the other way. Most will say to themselves and others ‘it’s not my problem’. The message that we all need to heed is much the same as we hear on public transport: ‘See it. Say it. Sorted.’ Leaving it to someone else is simply not the right thing to do.

This post was originally published on pacipr.com.

FX 101 – what clients and IP professionals need to know about Foreign Exchange

I’m going to explain what you really need to know about foreign exchange (‘FX’). What is in truth very straightforward, is made complicated by those in whose interests it is to do so. Read this and you won’t be FX’d by anyone ever again.

‘SPOT’ FX – “I WANT FOREIGN CURRENCY TODAY PLEASE”

For a legal professional, perhaps the most common situation involves payment of charges from a foreign firm in local currency; the bill comes in and you want to pay it today. The circumstances are no different to one that we all know well and that I will use to explain the principles involved.

You turn up at the airport and need some cash for when you arrive at your holiday destination.  You have US Dollars and want UK Pounds. The exchange rate offered is to buy £1 will cost you US$ 1.4400 (FX rates are quoted to 4 decimal places).

You say “Hey, I thought the rate was 1.3400 – I looked it up on the internet this morning”.

The cashier replies “Sorry sir, the rate you are referring to was probably an interbank rate and would only have been available to you if you had exchanged a million dollars or more, and we don’t handle transactions of that size here.”

“Oh” you say, feeling a little foolish, “I only need £100” and to which the cashier replies, “the cost to you, sir, will be US$ 144.”

In the professional situation, where you are paying an invoice in foreign currency, your objective should be to get the best rate for your client. This may mean negotiating with your bank for better rates or working with some of the challenger currency providers such as CurrencyFair and Transferwise.

Profit Margin

In the example, the key difference is between 1.3400 (the interbank rate) and 1.4400 – i.e. 10 cents (or 100 basis points if you want to speak like an FX trader). The provider makes US$ 10 on the deal and the profit is built into the rate so if you change your mind and want £500 then the provider makes US$ 50.

FORWARD CONTRACT – “I WANT A SPECIFIC AMOUNT OF FOREIGN CURRENCY ON A SPECIFIC FUTURE DATE”

Example: You have to send a payment of US$ 10,000 to pay an agreed fee to a US patent agent six weeks from now and want to be sure that you collect the right amount from your client in advance. You ring your bank.

You say “I need US$ 10,000 in six weeks’ time. How much is that going to cost me in addition to the spot price?”

The bank’s FX person replies, “at this time interest rates are the same for US Dollars and Sterling for the six-week period, so the spot and forward rates are the same – I can give you a rate of 1.3100”.

“What if the interest rates had been different?” you might ask.

The answer is quite simple:

  • You always start with the spot rate on the day you negotiate the forward contract.
  • If the interest rate earned by the currency you have is higher than the currency you want then the forward contract will have a cost (a ‘hedging’ cost) and will be reflected in the rate – essentially you will get a worse rate than the spot rate.
  • If the interest rate earned by the currency you have is lower than the currency you want then the forward contract will have a gain (a ‘hedging’ gain) and will be reflected in the rate – essentially you will get a better rate than the spot rate.

WHY DO INTEREST RATES MATTER?

If you enter into a forward contract that matures in six weeks then it is assumed that you and the bank will each place the money on deposit for six weeks earning the relevant interest rate.  So, if there is a difference then that difference is applied for the period (six weeks) and added as a cost, or as a gain, depending which currency earns more.

FX BUYING POWER

If you are regularly handling large foreign exchange transactions then the spot rates you get should be nearer to the interbank rate.  Buying power does not influence the hedging cost (or gain) in a forward contract as that is determined by interest rate differentials alone.

CONCLUSION – LET THERE BE NO UNCERTAINTY!

Legal service firms do not need to take risks with FX. There is no need for uncertainty.  Charging for FX risk that does not, and need not, arise must be wrong. Charging for organising FX transactions may well be a service that firms wish to charge for, in which case those charges are professional fees that should be made clear to clients in advance.

This post was originally published on pacipr.com.

Hope is not a strategy. Trust is not good governance.

Hope and trust are similar human traits that, in similar ways, serve to bolster our confidence that things will turn out well. Trust is more specific than hope and is commonly invested in a person or organisation. Trust implies an expectation of a particular outcome, or specific behaviour, for which another is held responsible.

I once spent an hour with Larry Light, at the time a brand consultant to Ford Motor Company and many others, and remember him speaking of the qualities of a strong brand and what he called ‘one think shopping’. His message was that trust in a brand could be enough to drive the customer’s choice.

Trust is useful as it allows us to reduce the effort we would otherwise spend on making sure that something gets done. Instead, we have an expectation and expect it to be met. If it is not, our trust is either modified – perhaps by introducing new conditions – or withdrawn.

MEETING EXPECTATIONS

In the world of professional services, the quality and longevity of relationships are greatly impacted by expectations and levels of trust established. For many, going to a lawyer is much like visiting a dentist: you trust in the person’s qualifications; the setting and equipment; and that you will be charged fairly for the work done. Once you have your mouth open and are being told more work is needed, you may have little choice but to mumble agreement.

There are so many demands on our time and to have to check that we are being charged correctly is a boring task we would prefer not to do. We are advised to check our utility bills, bank statements and restaurant bills. How many of us don’t bother and end up paying the price?

DON’T RELY ON TRUST

My firm recently launched a tool that verifies invoices for IP renewals. It addresses the information asymmetry that exists between customer and supplier, including the difficulty of identifying correct Official Fees for each country.

Many responses to marketing messages have essentially said: ‘We are happy with our current supplier’ or ‘Adding verification to our process would involve extra work’. One person confirmed that her role was to authorise payment and that doing so was based entirely on trust; which surely made her role redundant.

Though understandable at a human level, it is surprising how many organisations simply don’t bother to check invoices. Remedies for breach of contract are literally of no consequence when there is no process for establishing whether there has been a breach. As Larry Light identified, the trust that people put in brands prevents them from carrying out basic checks that the organisation is playing fair. Even when we have trust in an organisation, it’s always best to ensure they are doing what they say they will. Surely good governance includes checking your bills, doesn’t it?

 

This post was originally published on pacipr.com.

New supplier joins CompareIP.com

I’m pleased to report that a new provider, IP Ants, has joined  CompareIP.com, giving IP owners using the service the benefit of five renewals providers from whom indicative pricing can be obtained. IP Ants is the (English) trading name of a service based in Beijing, China. It has a team of 37 and offers an online patent annuity platform as well as an online renewals platform for trademarks. The IP Ants website is available in English, Chinese, Japanese and Korean.

The other providers are:

They join me in welcoming IP Ants to the fold.