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How to successfully implement legal tech into in-house legal teams

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The emergence of Legal Tech, or LawTech, represents a significant shift in the legal profession, mirroring the impact of FinTech on the financial industry.

Improving technology remains a top priority for legal firms, particularly in-house legal teams. This deep dive addresses questions about Legal Tech and its implementation.

Legal tech, not to be confused with legal for tech, refers to a suite of technologies designed to support, supplement, or outright replace traditional methods for delivering legal services and improving operational efficiency.

The Solicitors Regulation Authority (SRA) has recognised legal tech potential to revolutionise the legal landscape, offering parallels to the FinTech revolution in finance.

With the market already worth an estimated $28 billion in 2022 and expected to grow, legal tech’s scope for expansion and innovation is vast.

The integration of legal tech offers many benefits to the legal industry.

Efficiency gains

One of the most significant advantages of legal tech is its ability to streamline operations. It automates routine tasks such as searching for contract terms or generating timelines, reduces the administrative burden on legal professionals, and frees up their time to focus on more complex and strategic activities.

Zegal, for instance, provides comprehensive solutions that encapsulate this efficiency through its platform, making legal processes more manageable and less time-consuming.

Enhancing transparency

The legal sector has historically been perceived as opaque, relying on complex jargon and processes.

Legal tech, however, is at the forefront of shifting this perception by offering user-friendly solutions that demystify legal processes. Platforms like Zegal play a pivotal role in this transformation, providing tools that promote clarity and understanding, thereby improving the overall quality of legal services.

Certainty and risk mitigation

Digitising legal processes through tech solutions significantly reduces the risk of human error and the loss of critical documents. Automated contract management systems will ensure that every piece of due diligence is accounted for, safeguarding against potential oversights.

Security enhancements

Data breaches are a constant threat, but legal tech offers robust security solutions, such as digital signatures and encrypted data rooms. These technologies secure sensitive legal documents and build trust with clients.

Despite its advantages, the adoption of legal tech is challenging. Initial barriers often include:

Funding constraints

One of the primary obstacles to legal tech adoption is the initial investment required. Legal technologies, especially sophisticated solutions like AI-powered contract analysis tools or comprehensive case management systems, can be expensive.

Strategies for overcoming funding constraints:

  • Cost-benefit analysis: Conduct a thorough cost-benefit analysis to understand the long-term savings and efficiency gains against the upfront costs. Demonstrating a clear ROI can help in securing budget approval.
  • Phased implementation: Consider a phased approach to adopting legal tech, starting with more affordable solutions to demonstrate value before investing in more expensive technologies.
  • Seek external funding: Explore options for external financing, such as grants, legal innovation funds, or partnerships with legal tech providers, which may offer favourable terms for new adopters.

A lack of tech literacy

The successful adoption of legal tech also hinges on the tech literacy of the legal team. A lack of familiarity with new technologies can slow down or even halt integration.

Strategies for enhancing tech literacy:

  • Tailored training programs: Implement comprehensive training programs designed to bring staff up to speed on the new systems. Consider leveraging the training modules provided by tech vendors.
  • Hiring tech-savvy staff: Enrich your team with professionals who can champion legal tech adoption and support their colleagues through the transition.
  • Encourage continuous learning: Foster an organisational culture that values continuous learning and innovation. Provide opportunities for staff to engage with new technologies through workshops, seminars, and conferences.

Resistance to change within organisations

Resistance to change is a natural human instinct, especially in traditional professions such as the legal industry. Concerns over job security, a preference for established ways of working, and scepticism about the effectiveness of new tools can all contribute to resistance.

Strategies for managing resistance to change:

  • Communicate benefits clearly: Ensure that the benefits of legal tech are communicated to all stakeholders. Highlight how it can alleviate burdensome tasks, allowing legal professionals to focus on higher-value work.
  • Involve teams in the selection process: Engage potential users in decision-making. Allowing them to have a say in selecting legal tech tools increases buy-in and reduces resistance.
  • Success stories and pilot programs: Share success stories and case studies from other organisations that have successfully adopted legal tech. Consider running a pilot program to demonstrate the technology’s practical benefits before a full rollout.

Overcoming these obstacles requires comprehensive planning, prioritisation, and the proper support to ensure legal teams can effectively integrate legal tech into their workflows.

Selecting the right tools

The selection process is crucial to overcoming potential resistance to new technologies. Involving employees at all levels in choosing the right tools ensures buy-in and identifies solutions that address the most pressing needs.

Effective implementation

Beyond selection, successful implementation hinges on thorough training and engagement. Custom-built tools and platforms require a deep understanding to be used to their full potential, underscoring the importance of comprehensive onboarding processes.

Ongoing support and evolution

The fast-paced nature of technology means that legal tech solutions require regular updates and feedback to remain effective. Engaging with service providers like Zegal ensures that legal teams have continuous support and access to the latest advancements in legal tech.

Legal templates, from NDA templates to shareholder agreements, are among the most transformative tools available to in-house legal teams. They serve as a foundational element for swiftly creating consistent, compliant, and professionally structured documents.

By starting with a template, legal professionals can significantly reduce the time and effort involved in drafting documents from scratch and ensure that all necessary legal and regulatory provisions are included.

  • Efficiency and time savings: Legal templates streamline document creation, allowing legal teams to produce necessary documents much faster than traditional methods. This efficiency frees up time for legal professionals to focus on more strategic tasks.
  • Consistency and compliance: Templates provide a standardised format that ensures consistency across all documents. Moreover, because templates can be updated to reflect the latest legal requirements, they help maintain compliance with current laws and regulations.
  • Reduced risk of errors: Using a pre-vetted legal template minimises the risk of omitting crucial clauses or incorporating outdated legal language, reducing the likelihood of contractual disputes or compliance issues.
  • Accessibility for non-legal professionals: Legal templates demystify the document creation process for individuals without legal training, making it easier for other departments to draft preliminary documents without immediate legal input.

Customisation and flexibility

While templates offer a solid starting point, customisation is vital to ensuring that each document accurately reflects the specific needs and circumstances of the transaction or matter at hand.

Zegal grants users access to various legal templates and customises them to suit their unique requirements. This flexibility allows for creating legally sound documents that are perfectly tailored to the specific context in which they will be used.

Integrating legal templates into the daily operations of an in-house legal team involves several steps:

  1. Template selection: Begin by identifying the most commonly used documents within your organisation and selecting templates for these documents as your starting point.
  2. Customisation process: Use platforms like Zegal to customise these templates, ensuring they align with your organisation’s legal and operational requirements.
  3. Review and approval: Establish a review process for customised templates to ensure they meet legal standards and receive approval from senior legal team members.
  4. Training and access: Provide training for the legal team and relevant non-legal staff on accessing and using these templates. Ensure everyone understands the importance of sticking to approved templates to maintain consistency and compliance.
  5. Ongoing updates: Review and update the templates regularly to reflect any changes in law, regulation, or company policy, maintaining a cycle of continuous improvement.

The role of Zegal

Platforms like Zegal play a crucial role in this process, providing a repository of legal templates and a comprehensive legal document management environment.

With features that support customisation, collaboration, and electronic signature, Zegal offers a holistic solution for leveraging legal templates effectively within in-house legal teams.

The platform facilitates the drafting and customisation of documents, their execution, and storage, creating a streamlined workflow from start to finish.

Contract automation

Contract automation stands out as a transformative solution for in-house legal teams. This technology harnesses the power of legal tech to simplify and accelerate the contract lifecycle, from initial drafting to final approval and execution.

Integrating contract automation into legal departments’ processes can achieve unparalleled efficiency, accuracy, and operational agility. 

Understanding contract automation

Contract automation involves using software to automate legal contract creation, negotiation, approval, and management. This technology leverages pre-defined templates and rules to generate contracts, streamlines the review and editing process through collaborative tools, and often includes digital signing capabilities to expedite execution.

The ultimate goal of contract automation is to minimise manual tasks, reduce the risk of human error, and shorten contract cycles.

Key benefits of contract automation

  • Increased efficiency: Automating repetitive tasks and utilising templates for standard agreements drastically reduces the time required to produce contracts. This efficiency allows legal teams to focus on more strategic aspects of their roles, such as risk management and compliance.
  • Enhanced accuracy: By standardising contract creation, automation reduces the likelihood of errors and inconsistencies. This ensures all contracts comply with current laws and company policies, mitigating legal risks.
  • Improved collaboration: Contract automation platforms often feature tools that enable real-time editing, commenting, and version control. This fosters better communication between legal teams, stakeholders, and external parties, facilitating smoother negotiations and faster consensus.
  • Streamlined approval processes: Automated workflows can route contracts to the appropriate parties for review and approval, ensuring that no time is wasted and all necessary checks are in place before a contract is executed.
  • Easier contract management and retrieval: Storing contracts in a centralised digital repository makes managing and retrieving documents more accessible. Advanced search capabilities and tagging mean users can quickly find specific contracts or clauses as needed.

Implementing contract automation with Zegal

Zegal is at the forefront of contract automation, offering robust solutions designed to integrate seamlessly with the workflows of in-house legal teams. Here’s how organisations can leverage Zegal for effective contract automation:

  1. Template customisation: Customise legal templates within Zegal for your most frequently used agreements. This ensures that your automated contracts align with legal and business requirements.
  2. Workflow design: Utilise Zegal’s workflow design features to establish automated processes for contract review, approval, and execution. This includes setting up notifications and reminders to keep contracts moving efficiently through the pipeline.
  3. Collaboration and negotiation: Use Zegal’s collaborative tools to negotiate contract terms directly within the platform. This speeds up the negotiation process and maintains a clear audit trail of changes and discussions.
  4. Digital execution: Leverage Zegal’s electronic signature capabilities to enable parties to sign contracts digitally, further reducing turnaround times and facilitating remote transactions.
  5. Contract management: Finally, use Zegal to store and manage completed contracts. The platform’s robust search and management features make it easy to keep track of contractual obligations, renewal dates, and compliance requirements.

The impact of contract automation

The impact of contract automation on in-house legal teams cannot be overstated. Freeing legal professionals from time-consuming administrative tasks allows them to devote more energy to strategic decision-making, risk assessment, and proactive legal counselling. 

Moreover, contract automation’s enhanced speed and agility enable businesses to respond more quickly to market changes, secure deals faster, and maintain a competitive edge.

Speeding up contract execution with bulk e-signing

Bulk e-signing is a groundbreaking feature of modern legal technology, redefining the efficiency and scalability of executing contracts and legal documents.

As businesses grow and the volume of contracts increases, a streamlined, secure, and time-saving document signing becomes paramount. 

The essence of e-signing

Bulk e-signing allows multiple documents to be signed electronically by one or more signatories in a single action. This technology bypasses the traditional, cumbersome process of signing legal documents individually, offering a seamless and expedited path to document execution.

By integrating bulk e-signing into their workflows, legal teams and businesses can significantly accelerate the contract execution phase, ensuring legal agreements are finalised promptly and efficiently.

Advantages of bulk e-signing

  • Enhanced efficiency: Bulk e-signing reduces the time and effort involved in the signing process. Legal teams can send out dozens or even hundreds of documents for signature in the time it would take to manually process just a few, freeing up valuable time for other tasks.
  • Improved accuracy and compliance: By automating the signing process, bulk e-signing minimises the risk of human error, such as missed signatures or misplaced documents. It ensures that every document is signed correctly and complies with legal requirements, reducing the risk of disputes or compliance issues.
  • Scalability: As organisations grow, so does the volume of contracts and legal documents requiring signatures. Bulk e-signing scales effortlessly to meet increasing demands, making it an ideal solution for businesses of all sizes.
  • Cost reduction: Bulk e-signing eliminates the need for physical document handling, including printing, mailing, and storing paper documents. This reduces direct costs and contributes to environmental sustainability by decreasing paper use.
  • Enhanced security: Digital signatures used in bulk e-signing are encrypted, providing higher security than traditional signatures. They also include a tamper-evident seal and an audit trail, ensuring the integrity and authenticity of signed documents.

Implementing bulk e-signing with Zegal

Zegal’s platform offers robust bulk e-signing capabilities designed to integrate seamlessly with the needs of modern businesses and legal teams. Here’s how to leverage Zegal for efficient bulk e-signing:

  1. Document preparation: Start by preparing the documents that require signatures, using Zegal’s template library and customisation tools to ensure they meet your specific needs.
  2. Signatory identification: Identify the parties required to sign each document. Zegal allows for flexible signatory assignments, accommodating various signing scenarios and hierarchies.
  3. Bulk sending: Upload and send multiple documents for signature in a single batch. Zegal’s intuitive interface simplifies this process, guiding users through each step.
  4. Tracking and management: Use Zegal’s tracking features to monitor each document’s status in real-time. Receive notifications as documents are signed and easily follow up on outstanding signatures.
  5. Secure storage: After signing documents, they are automatically stored in Zegal’s secure, cloud-based repository. This facilitates easy access and management of executed contracts.

Bulk e-signing is not just a feature; it’s a strategic tool that propels businesses into the future of digital contract execution. Its adoption signifies a commitment to operational excellence, leveraging technology to streamline processes, enhance compliance, and drive business growth. 

As legal tech advances, bulk e-signing stands out as a critical enabler of efficiency and scalability in the digital age.

The integration of legal tech represents a forward-thinking approach to legal practice, offering unparalleled benefits in efficiency, security, and accessibility.

While the path to full integration may present challenges, the strategic application of resources, careful planning, and support

Platforms like Zegal play a crucial role in this process, providing a repository of legal templates and a comprehensive legal document management environment.

With features that support customisation, collaboration, and electronic signature, Zegal offers a holistic solution for leveraging legal templates effectively within in-house legal teams. 

How does Share Vesting work?

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Share vesting is when a company gives its equity to its employees or consultants to keep them with the company and incentivize them to reach established performance goals.

You will likely find your share options in your Employment Contract, and they are often used when a senior employee or an important advisor or consultant comes on board.

What are vesting shares?

Share vesting means the company gives its shares to an individual upfront, and the shares are subject to the company’s right to repurchase them.

These shares are known as unvested shares. The buyback right extinguishes over time (or upon fulfilment of certain conditions).

Shares released from this buyback right are known as vested shares. This mechanism is sometimes known as reverse vesting, as opposed to the grant of a share option, which is forward vesting.

Share vesting enables a senior employee or an advisor to have equity immediately upon coming on board. However, the company still retains control over those shares by way of a right to buy back, and, in this way, the company keeps the employee or advisor on board until the end of the vesting period. 

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How share vesting works

Step 1: Check your company’s Articles of Association/Constitution

Check if the company’s constitutional document restricts the buyback of its shares.

If it does, you may build in some appropriate mechanisms in your Share Vesting Agreement or consider another form of rewarding your team (for example, a Share Option Plan).

Step 2: Create a Share Vesting Agreement

Create and sign the Share Vesting Agreement. After signing, the following will take place:

  1. The employee/consultant pays for the shares on the “Purchase Date” that you set in the agreement;
  2. On the Purchase Date, the company secretary issues share certificates in the name of the employee/consultant, and he then becomes a company shareholder. The number of the share certificates and the number of shares covered by each certificate should match the vesting schedule;
  3. The employee/consultant signs a document known as a “Share Power” and delivers this document to the company secretary;
  4. The company secretary keeps the share certificates in the name of the employee/consultant and the Share Power in escrow; and
  5. When shares are vested (i.e. released from the company’s right to buy back) according to the terms of the Share Vesting Agreement, the share certificate in respect of that part of the shares will be delivered by the company secretary to the employee/consultant.

Step 3: The share recipient pays for the shares and signs the Share Power Agreement

The employee/consultant pays for the shares on the “Purchase Date” you set in the agreement.

In addition, the employee/consultant signs a “Share Power” and delivers this document to the company secretary.

Step 4: The company secretary issues and holds on to the share certificates

On the Purchase Date, the company secretary issues share certificates in the name of the employee/consultant, who then becomes a company shareholder.

The number of share certificates and shares covered by each certificate should match the vesting schedule.

The company secretary keeps the share certificates in the name of the employee/consultant and the Share Power in escrow.

Optional: Exercise of the buyback right

If the employee/consultant leaves the company, any unvested shares will be subject to the company’s right to buyback.

The company may exercise its buyback right for three months after the employee/consultant leaves. The buyback right is deemed to be automatically exercised by the company upon the expiry of the three months.

This is unless the company notifies the employee/consultant that it does not intend to exercise the buyback right.

If and when the company exercises the buyback right, the company needs to pay the buyback price for the shares (the same price that the employee/consultant paid for the shares in the first place) to the employee/consultant.

Following this, the company secretary takes the necessary steps to make the transfer effective.

After the buyback, under Hong Kong and Singapore law, those shares will be regarded as cancelled. Ensure the company secretary files with the Companies Registry/ACRA within the applicable statutory timeframe after the share buyback.

Optional: Exercise of the call option

When creating the Share Vesting Agreement, you may opt for a “call option” to be put in place. This call option enables the company to do one of two things:

  1. Buyback all vested shares at fair value; or
  2. Convert all vested shares to non-voting shares (i.e. the employee/consultant, being the holder of the vested shares, can still receive dividends from the company but has no say in the company’s decision-making).

The company may exercise the call option for six months after the employee/consultant leaves the company.

Share Options vs Share Vesting

In a nutshell:

  1. 1st Step: A company’s board of directors will grant share options to key employees (beneficiaries of an Employee Share Option Plan or ESOP).
  2. 2nd Step – The exercise of those share options is conditional upon completing pre-set conditions.
  3. 3rd Step—Share vesting occurs upon the completion of all pre-set conditions: new shares are allotted, or existing shares are transferred to the beneficiaries.

In detail:

Share options are meant to create incentives for the key/senior employees or executives (directors) to stay in the company and increase profitability. Employees holding share options will be motivated to increase the value of their shares and will eventually enable long-term value creation.

A share option plan ultimately aligns the interests of the employees with those of the shareholders and the management, creating a shared stake in the company’s results. It represents a significant step toward a company’s better corporate governance.

A clear understanding of the basic option terms is essential for drafting the detailed terms of a share option plan.

The summary below will provide some guidance towards the mechanisms of a share option scheme, where share grant options limit a private company.

Share options

A share option gives an employee the right to access the company’s share capital in the future. When an employee owns a share option, it is crucial to remember that he/she does not yet own any share in the company. 

The mechanism of a share option is similar to that of a call option as it gives its holder the right to buy shares at a pre-determined price only if certain conditions are met.

An option is a right and not an obligation, meaning the employee cannot be forced to purchase the shares. On the other hand, by granting share options to an employee, the company undertakes to issue the said shares upon satisfaction of the pre-determined conditions and exercise of the options by the employee.

What does a company grant when granting share options? A share option gives conditional access to one or several share(s) of the company. A share option does not grant the employee any of the rights attached to shares, which means that the employee is only entitled to participate in general meetings or to receive dividends once the shares are effectively allotted.

Share options are generally granted for free and cannot be transferred nor sold to other persons by the grantee.

Share vesting

As a share option plan is generally conditional upon the employee satisfying several pre-set conditions or upon the occurrence of pre-set events, the share vesting is the acquisition of the actual right to exercise the options.

The Institute of Directors (IoD) Launches Exclusive Partnership with Zegal

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LONDON, UK, 13 January 2022 — The Institute of Directors (IoD) Launches Exclusive Partnership with Zegal, increasing legal protection for more than 20,000 UK small and medium sized businesses.

Access to legal services is one of the key pillars in the growth of the small business sector. A 2021 report by the Legal Services Board concluded that ​​ ‘across the board, SMEs are frustrated that getting legal issues resolved can be costly and time-consuming’. That’s why the UK’s Institute of Directors is working in conjunction with Zegal, to give IoD members free access to the Zegal web App which includes 1,000s of legal templates designed specifically for UK small business.

Zegal is a legal services platform for SMEs used by over 20,000 organisations globally to manage contracts digitally, to save time and money, and increase legal protection so that they grow faster.

Jonathan Geldart, Director General of the IoD, said:

“Directors equipped with the tools they need to be legally compliant can run better, more transparent organisations. We are delighted to be working with Zegal and their legaltech platform to compliment the extensive range of technology solutions built for leaders of small and medium sized businesses, already available to our members. ”

Daniel Walker, Founder of Zegal, said:

“The IoD is the leading organisation for small and medium sized businesses in the UK, and we could not be more excited that they have chosen our platform for their members. This exclusive collaboration creates a fantastic opportunity for the IoD and Zegal to satisfy the unmet needs of many 1,000s of SMEs. Whether members are looking for a quick NDA, employment contract, raising money or even selling their business, each contract template includes a step-by-step Document Builder, designed by legal experts so users can create bespoke contracts in minutes. The process is always the same. Select your template, edit, negotiate, finalise and eSign without ever leaving the App. ”

For more information and/or interview requests please contact Oliver Boote at oliver.boote@zegal.com.

Linkedin | Facebook | www.zegal.com 

ABOUT ZEGAL

Zegal is the end-to-end platform for the legals smaller companies need. 

Our story

Zegal was founded in 2014 by lawyer friends Daniel Walker and Jake Fisch. Having been a part of the system that preserves quality legal advice only for those that can afford it, the two were determined to build a model that delivers the ‘corporate law firm’ experience to small business.

Today Zegal is the world’s only end-to-end platform for smaller companies to create, negotiate, and sign both the simple, and complex contracts they need to run their business, with expert legal advice, 100% online every step of the way. Since our launch, we have helped more than 20,000 companies close commercial contracts, run leaner HR teams, and enter new markets. You can use Zegal for your company in the UK, Australia and across Asia. Make your legals simple.

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

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READ MORE: UK Startups: Essential Legal Documents

Seed Investors in Manchester

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As the name may suggest, seed investing refers to the initial funding stage of a business venture which typically entails a small amount of money dedicated to the research and development of the company’s product. Operating similar to equity, seed investors will provide money to the early-stage company based on the valuation of the startup in exchange for a stake in the business. The city of Manchester is one of the top technology hubs for startup growth, boasting more startups than anywhere else in the North West, thus serving as an ideal location for early-stage companies. If your startup business is located in Manchester and you’re looking for a source of initial capital, here are some of the most active seed investors in Manchester to consider. 

  1. Entrepreneurs Fund 

Boasting a rich portfolio of various entrepreneurial teams, the Entrepreneurs Fund prides itself on supporting individuals and businesses who share values of fairness and transparency. As an existing venture capital member of COFRA Holding, one of the world’s largest groups of family-controlled businesses, this organisation knows exactly how to support the formation and growth of technology-driven global businesses during its seed stage and beyond. The Entrepreneurs Fund typically invests between €250k and €10m in seed-stage businesses. The fund invests from around €250k to more than €10m in individual companies. The typical initial investment is €1 to 2m and the fund normally aims to invest at least €5m over the life of a company. 

2. Deepbridge Venture Capital 

Deepridge Venture Capital is another seed investor in manchester committed to investing in growth-focused companies by fostering a community of passionate, fair-minded, and practical professionals. Alongside a team of mentors, their ambition to achieve the highest levels of corporate governance allows them to provide the best outcome for investors. Deepbridge invests anywhere from less than £150k up to £10m and, additionally, does not invest exclusively in companies that are EIS and/or SEIS-qualifying. While the fund is determined to invest across a wide range of market sectors, most of its professional experience lies in renewable energy and technology sectors.

3. Ignite 

For more than a decade, Ignite has been helping launch and scale small businesses through the assistance of experienced entrepreneurs and active investors. Their tried and true programme has been run all across Europe and offers the opportunity to collaborate and receive mentoring from industry experts. This fund’s experienced team is comprised of founders of startups who have raised investment globally and successfully exited companies; thus providing a unique opportunity for startup founders to gain valuable and bespoke advice from the industry’s own trailblazers. Ignite typically invests £17k in participants of their accelerator programme which includes workspace for up to six months, access to the fund’s incubator space, and growth support. The fund takes an 8% stake in exchange for investment, or 4% of businesses have already received funding.

4. Crowdcube 

Crowdcube encourages investors of all stages to diversify their portfolio beyond property and pension by investing in startup, growth, and venture-backed businesses with the potential to deliver significant returns. Catering to new and experienced investors, Crowdcube provides a simple, secure, regulated method of investing through their in-house team of legal professionals. Crowdcube typically works with companies raising between £250k and £1m, with a minimum of £20k. There is no maximum target amount, however, the optimum range is between £100,000 and £150,000.

5. Foresight Group 

Underpinned by a strong commitment to ESG initiatives, the Foresight Group strives to implement its investment strategies in a way that will work towards creating a sustainable legacy for future generations. This group aims to support small businesses across the UK with attractive investment opportunities and growth capital, all the while offering advantageous tax-efficient opportunities to private investors. The Foresight Group typically invests between £1m and £3m in companies with a strong sustainability focus. There is also a Foresight Solar & Technology VCT. Companies should have between £0.5m and £2m EBITDA at the time of investment.

6. LMarks 

With over 70 innovation programmes launched across the UK, Europe, Israel, Asia, and the US, LMarks has developed and implemented a ‘learn-by-doing infrastructure securing their consistent growth and a reputation for having the UK’s largest network of corporate innovation labs. By leveraging the ideas of seed-stage businesses, LMarks and their invested companies have risen as competitors in all sectors. Their fund provides growth capital and works closely with businesses to create a tailored mentoring programme to track progress and chart growth.

7. Catapult Ventures 

The team behind Catapult Ventures holds more than 10 years of professional experience across a plethora of industries from healthcare and pharmaceuticals to luxury consumer brands. Catapult Ventures is an independent Fund Manager. Committed to supporting ambitious entrepreneurs and value creation through long-term relationships with seed-stage companies, the owners of Catapult Ventures each operate a number of discrete venture capital funds on behalf of a range of public and private sector investors, with a total of £130m under management.

8. Draper Esprit 

Draper Esprit plays an active role in assisting seed-stage businesses with investment opportunities worldwide through their bespoke mentorship programme and commitment to investing in the best European technology companies. While highly selective, making 10 to 20 new investments every year, this organisation pushes for rapid scale-up and helps establish a strategic position for each of its companies. Draper Esprit typically invests between $2m and $50m in Series A and Series B rounds. Notable investments include Push Doctor and POD Point.

Finding initial investment as a seed-stage company can often be intimidating and overwhelming, but there are investors and venture capital companies available to assist you in scale-ups and the overall development of your company as it matures. Get in touch with our team of experts to find out more about how your company can receive early investment opportunities. 

These are the 8 most popular seed investors in Manchester.

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Everything you need to know about IR35

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taxIf you are a freelancer, contractor, consultant, in any way self-employed, or are hiring those who are, you’re going to need to know everything you can about IR35. 

Here is our complete IR35 guide including exactly what it is, who it affects, whether you fall inside or outside of it, and a checklist to ensure you comply. 

What is IR35?

In a nutshell, the new off-payroll IR35 rules is a set of tax laws that form part of the Finance Act in the UK. After a year’s delay due to Covid-19, the regulations took effect on April 21st, 2021. 

So, what have they changed the rules for? Well, the new IR35 rules were created to distinguish employees “disguised” as individual contractors for tax purposes. In recent times, the gig economy has contributed to an explosion in contract employment where an individual engages with a business, often through a third party, such as a personal service company (PSC). And thus receives tax benefits they otherwise wouldn’t if they were an employee.

Previously, it was the role of the PSC to determine whether the individual falls inside, or outside the IR35 regulations to pay any increased tax. Now, the business that engages the contractor needs to make this assessment.

Inside IR35 

Specifically, when you are inside IR35, you pay the same national insurance and tax as a permanent employee. You should have the correct PAYE deductions as a regular employee taken from your salary. Also, your employer/client will match your national insurance contributions to the government. 

Quite simply, being ‘inside IR35’ means you are paying tax appropriately for your role as an employee. If your role changes, you will need to reassess your status. 

If you are found to be ‘inside IR35’ after an enquiry, HMRC will calculate the tax, national insurance contributions, and interest, for the time period. You will also be subject to a penalty if they decide your status was incorrect. 
 
 As a rule, if you are receiving the same rights as a permanent employee, you are likely to be inside IR35. This includes sick pay, holiday entitlement, sick pay, and certain benefits.

 

Outside IR35

Generally, being outside IR35 means you are a legitimate contractor receiving a salary from your limited company. 

Contrary to an employee, it’s your responsibility to pay the correct national insurance and taxes on the funds resulting from your work. Additionally, you are not subject to PAYE from your contract client. However, you may still be subject to an enquiry from HMRC.

Who does IR35 affect? 

The new rules have implications for businesses across all sectors but the government maintains that it will not affect genuinely self-employed individuals. 

Contractors that work through their own limited company don’t get benefits such as holiday leave or sick pay. Instead, they benefit from tax efficiencies. However, sometimes contractors use this tax efficiency while also receiving employee benefits. HMRC amended the off-payroll working rules to stop this from happening. Now contractors, who would have been an employee if they were providing services directly to clients, pay the same tax and National Insurance contributions as employees.

For example, a contractor working onsite for a rolling contract using a specialised computer provided by the client and being paid monthly wages would likely be inside IR35. This is especially true if they need to clear a holiday with the client. 

Another example is a contractor working from home, on their own laptop, for a four-month contract with a fixed payment for the work. That would usually fall outside IR35.

While an IT contractor working for a firm on a one-off project which is due to take three months, using their own equipment, working from home, and being paid a fixed amount for that work, would usually be seen as outside IR35.

These changes were set to take effect in 2020 but were put on hold during the initial COVID-19 pandemic. They officially came into play in April 2021. 

UK

Determining IR35

Again, the assessment obligation will sit with the business that engages the contractor. Should contractors be treated as employees for tax purposes, the client will then be responsible for the tax burden.

HMRC will take a view of the whole situation and how it works in real life, rather than just how the contract appears on paper. But these are the principles:

  • Substitution: Does the contractor have to carry out the work personally, rather than being able to send a substitute?
  • Mutuality of obligation: Does the client have to provide the contractor with work, and/or does the contractor have to carry out any work that the client requests?
  • Control: Does the client have control over how, when, and where the contractor carries out the work?

If the answers are yes to these questions, this will indicate a quasi-employment relationship, which falls under IR35.

HMRC has a tool for employers called the Check Employment Status for Tax which was introduced with the reforms to IR35 in 2017. This can help to determine whether someone working falls inside IR35 or not.

How to hire contractors in compliance with IR35

Here are some strategies to make sure your contractors are legitimately outside IR35:

  1. Communication is key. It is in both parties’ interests for tax and employment status to be confirmed well ahead of major legislative change or a status enquiry from HMRC. Start by having a compliant written contract. But the true relationship between contractor and client will always supersede any written terms.
  2. For individual freelancers or contractors, you should collect evidence to show you belong outside IR35. Gather emails, supporting documents or agreements from a client reflecting that you operate as a genuine business. Should your client suddenly decide you belong inside IR35, if and when reform lands, you’ll be in a stronger position to overturn the determination. Such evidence can include your company stationery, business cards, and website as well as anything else to suggest you operate as a business.  
  3. The sheer complexity of IR35 means it’s not a bad idea to have your contract looked over by an independent party. A specialist can carry out an IR35 contract review of not only your written contract but your actual working arrangement too. 

If you engage sub-contractors regularly, you can complete a Status Determination Statement (SDS) so you are clear about the employment status for tax purposes.

freelancer
This guy’s got his IR35 status sorted.

How to be outside IR35 as a freelancer, contractor, or consultant

So, how do you make sure you are outside IR35? Here are some strategies to put in place that will ensure you set yourself up as properly self-employed.

  • No benefits 

Benefits are for employees. If you’re a contractor, (and therefore outside IR35) you shouldn’t be getting private healthcare from your client. Also, you shouldn’t get paid holidays.  

  • No perks

That includes the free barista service, the office gym, creche, and anything else that is a built-in perk for employees. If you want to clearly keep yourself outside the limits of IR35, these workplace comforts are not for you. There’s no sick pay in the world of a freelancer. And pension contributions are out of the question.

  • No internal comms

You’ll have to decline a company email or access to the Intranet where you’ve taken up a contract. This also includes frequently used comms apps like Slack, Flock, and Hangouts.

  • Use your own stuff

This means you should be using your own equipment to do the job. Whether that is a computer or desk or any specialist gear.

  • Have insurance

Professional indemnity insurance is considered essential for contractors, consultants and freelancers alike.  As indemnity insurance covers your legal costs and compensation payments if your client takes legal action against you if you make a mistake on the service you provide.  And, it’s a clear marker for HMRC that you are indeed self-employed.

  • Start and finish

For a contractor, having deadlines and endpoints to your contracts is a part of the service that makes you a contractor. Your relationship with your clients should have projects with clear definition, goals and timelines. This includes a conclusion to the contract, rather than keeping it ongoing. To be outside IR35, you need to work on multiple projects simultaneously and have multiple sources of income.

  • Flexibility 

You may need to be on-site at times for meetings and project management reasons, but you should also be able to work from wherever you need to be and not subject to regular working hours like an employee is. 

  • Proper paperwork

Clauses in your contract should include no mutuality of obligation, rights of substitution, immediate dismissal, and control clauses. Your client should never have direct control over the way you provide your services. Your client does not need to provide you with work. You also do not need to say yes to the work you offer. Keeping your paperwork in order will help if you do have to undergo an HMRC investigation.

When you’re preparing your contracts, you’ll need to include the above clauses in your consultancy agreement, freelance agreement or supply of services contract with your clients. And then importantly, live by them as well. Otherwise, you could be viewed as an employee.

To Conclude

Make sure you know everything you need to know to comply with IR35’s new regulations. You do not want to find you’re operating on the wrong side of it and undergo an HMRC investigation with potentially enormous penalities. Best to sort your status, or that of your hires, right from the start. 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

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ABOUT ZEGAL

Zegal is the end-to-end platform for the legals smaller companies need. 

Our story

Zegal was founded in 2014 by lawyer friends Daniel Walker and Jake Fisch. Having been a part of the system that preserves quality legal advice only for those that can afford it, the two were determined to build a model that delivers the ‘corporate law firm’ experience to small business.

Today Zegal is the world’s only end-to-end platform for smaller companies to create, negotiate, and sign both the simple, and complex contracts they need to run their business, with expert legal advice, 100% online every step of the way. Since our launch, we have helped more than 20,000 companies close commercial contracts, run leaner HR teams, and enter new markets. You can use Zegal for your company in the UK, Australia and across Asia. Make your legals simple.

RELATED READING: Hiring a consultant for your UK business? A consultancy agreement is a must

READ MORE: UK Startups: Essential Legal Documents

IR35 Guide for Freelancers

Written by

freelancer

If you’re a freelancer in the UK, you’ll be needing to understand whether you fall under the scope of the new IR35 regulations or not. Here is a detailed IR35 Guide for Freelancers.

What’s IR35?

A good place to start is to check out why the government has put the new regulations in place. As of April 6, 2021, IR35 came into action to help stop ‘disguised employees’. In a nutshell, the gig economy has created plenty of workers that enjoy all the benefits and perks of an employee but are classified as self-employed, and HMRC wants it to stop.

IR35 rules now apply to ‘medium or large’ sized businesses in the private sector and all organizations in the public sector. There’s an exemption for ‘small businesses.

How to determine your IR35 status as a freelancer

The government has put out a toolkit to help you determine your status. However, this is not as clear-cut as it sounds and you’ll need to examine your client contracts to ascertain if you fall inside or outside IR35 as a freelancer.

Confusingly, freelancers are no longer responsible for assessing their project’s IR35 status. It’s now the end client that is responsible for determining whether an assignment is inside or outside of IR35 rules. However, it’s in your best interests to make sure you are clearly self-employed and remaining IR35 compliant so it’s best to know your contracts inside out before you sign.

You’ll want to point a discerning eye at the details of your contract to assess the following:

    • Your responsibilities
    • Who decides what work needs doing
    • Who decides when, where, and how the work is done
    • How you will be paid

Inside or Outside IR35?

In essence, inside IR35 means the client pays Income Tax and NICs (employers and employees) to HMRC. It also means the freelancer does not receive any benefits that an employee would have access to. The client must make this decision before engaging a freelancer and then fill in a Status Determination Statement (SDS). They must then provide the SDS in writing to the freelancer before the assignment begins.

However, if a client is based overseas and doesn’t have any UK offices, the new rules do not apply.

If you are chosen for an IR35 inquiry

If HMRC decides to investigate you, you will first receive an opening letter to which you will need to respond with a breakdown of your income, expenses, contracts, and an explanation of why these contracts should be outside IR35. After that, if you haven’t provided sufficient proof, you may be called for a meeting with HMRC compliance to provide more information. However, you can request the inquiry continues by post rather than face-to-face.

Generally, the inquiry will focus on one specific tax year. And after HMRC has gone through all the evidence, they will make a decision. You may appeal if they determine you are insider IR35, however, there are costs involved.

How to be outside IR35

Here are some tips to making sure you stay on the right freelancer side of IR35:

  • keep your records of work and contracts up to date and well filed
  • don’t take on a job where you are replacing an employee
  • do your tax returns on time

Freelancers providing services will always be susceptible to accidentally falling outside the new IR35 regulations. Keeping thorough records, reading through your contracts carefully before you sign on, and keeping under the radar of HMRC, as all sound ways to ensure compliance.

Important to note

Notably, freelancers and contractors do not have to pay penalties for errors relating to off-payroll assignments for the first year.  Additionally, the new rules will only apply to services carried out from 6 April 2021.

You can also check out our IR35 checklist to make sure you have everything in order.

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

BECOME A ZEGAL REFERRAL PARTNER

ABOUT ZEGAL

Zegal is the end-to-end platform for the legals smaller companies need.

Our story

Zegal was founded in 2014 by lawyer friends Daniel Walker and Jake Fisch. Having been a part of the system that preserves quality legal advice only for those that can afford it, the two were determined to build a model that delivers the ‘corporate law firm’ experience to small business.

Today Zegal is the world’s only end-to-end platform for smaller companies to create, negotiate, and sign both the simple, and complex contracts they need to run their business, with expert legal advice, 100% online every step of the way. Since our launch, we have helped more than 20,000 companies close commercial contracts, run leaner HR teams, and enter new markets. You can use Zegal for your company in the UK, Australia and across Asia. Make your legals simple.

READ MORE: UK Startups: Essential Legal Documents

READ MORE: New April 2020 tax rules in UK and how to comply with IR35

How to be outside IR35

Written by

Two anime guys hold a business partnership contract in a busy office.

With the April tax changes in the UK, consultants, freelancers, and contractors may need to make some minor adaptions to how they work to make sure they can stay outside IR35 for their next tax return. 

So, how do you make sure you are outside IR35? Here are some strategies to implement to ensure you set yourself up as properly self-employed. 

Get the outside IR35 in writing

Keeping your paperwork in order will help if you do have to undergo an HMRC investigation.

Clauses in your contract should include no mutuality of obligation, rights of substitution, immediate dismissal, and control clauses.

Your client should never have direct control over how you provide your services. Your client can give you work without providing you with work.

You must include these clauses in your consultancy agreement, freelance agreement or supply of services contract with your clients. And then, importantly, live by them as well. Otherwise, you could be viewed as an employee.

Ignore the perks

Yup, all those lovely little bonuses that make a workplace into a home away from home should be out of bounds for you.

That includes the free barista service, the office gym, creche, and anything else that is a built-in perk for employees. If you want to clearly keep yourself outside the limits of IR35, these workplace comforts are not for you. 

No benefits either

Benefits are for employees. If you’re a contractor outside IR35, you shouldn’t be getting private healthcare from your client.

Also, you shouldn’t get paid holidays. There’s no sick pay in the world of a freelancer. And pension contributions are out of the question. 

Stay external

It’s all too easy to accept an invite into the internal communications channels for easy access to the people you’re working with.

However, this is a no-no for keeping outside IR35. 

You’ll have to decline a company email or access to the Intranet where you’ve signed a contract. This also includes frequently used comms apps like Slack, Flock, and Hangouts. 

Get insurance

Professional indemnity insurance is essential for contractors, consultants and freelancers alike.

As indemnity insurance covers your legal costs and compensation payments, if your client takes legal action against you for any element of the services you provide or mistakes you make, you shouldn’t be without it as a working professional.

And it’s a clear marker for HMRC that you are indeed self-employed.

Clear projects with clear endings

For a contractor, having deadlines and endpoints to your contracts is a part of the service that makes you a contractor. 

Your relationship with your clients should have projects with clear definitions, goals and timelines. This includes a conclusion to the contract rather than keeping it ongoing.

To be outside IR35, you need to work on multiple projects simultaneously and have numerous sources of income.

Work where you want 

Although you may need to be on-site for meetings and project management reasons, you should also be able to work from wherever you need to be and not be subject to regular working hours like an employee is.

You also use your own equipment to do the job. Flexibility is one of the perks of being a contractor. 

And remember: You also do not need to say yes to the work you offer.

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ZEGAL SEES HUGE CUSTOMER GROWTH IN THE UK

Written by

small business

Zegal, the end-to-end legal platform for small businesses, launched in Australasia, sees tremendous growth in the UK. 

LONDON, UK, 20 June, 2021 —Increasing small business demand for online end-to-end legal services in the UK has Zegal rapidly expanding its team and product range. 

Small businesses in the UK, well-versed in using cloud accounting services like Xero with their accountants, are demanding the same and more from their legal advisors.  Enter Zegal.  The Zegal platform, which is used across Australia and Asia by more than 20,000 smaller companies and their legal advisors, has seen tremendous growth in the UK as businesses adapt to work-from-home offices.

Zegal is designed to be end-to-end—enabling companies to do legal work that is more complex. Zegal’s sophisticated software is the core of the experience, providing the technology for businesses to work alone; or together with good old fashioned real-life lawyers, working virtually through the platform, whenever needed.  The result is streamlined and affordable legals.

As a global Software as a Service (SaaS) company, Zegal was built for the cloud and is an example of how technology companies are providing significant opportunities to small businesses the world over by leveraging the benefits of scale and leveling the playing field.  Zegal recently announced a collaboration with British leading virtual law firm 360 Business Law, selected by Zegal to deliver legal advice to its UK clients. Clients using Zegal’s contract management application can now access a free 30-minute consultation with a lawyer at 360 Business Law.

Daniel Walker, Zegal Founder says, ‘The transition we’ve seen from office to remote working has driven a huge demand in the UK market for virtual legal counsel and platform solutions. We are seeing the strongest demand within the mid-market space, which is a very exciting opportunity.’  

For more information and/or interview requests please contact Alicia Walker at alicia.walker@zegal.com 

 

Linkedin | Facebook | www.zegal.com 

ABOUT ZEGAL

Zegal is the end-to-end platform for the legals smaller companies need. 

Our story

Zegal was founded in 2014 by lawyer friends Daniel Walker and Jake Fisch. Having been a part of the system that preserves quality legal advice only for those that can afford it, the two were determined to build a model that delivers the ‘corporate law firm’ experience to small business.

Today Zegal is the world’s only end-to-end platform for smaller companies to create, negotiate, and sign both the simple, and complex contracts they need to run their business, with expert legal advice, 100% online every step of the way. Since our launch, we have helped more than 20,000 companies close commercial contracts, run leaner HR teams, and enter new markets. You can use Zegal for your company in the UK, Australia and across Asia. Make your legals simple.

 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

BECOME A ZEGAL REFERRAL PARTNER

READ MORE: UK Startups: Essential Legal Documents

READ MORE: New April 2020 tax rules in UK and how to comply with IR35

Zegal and 360 Law Group to bolster UK small business economy 

Written by

small business

Zegal, the end-to-end legal platform for small businesses, and 360 Law Group, give UK companies ability to control their own legals from home

LONDON, UK, 10 June 2021 —Increasing small business demand for online end-to-end legal services in the UK has Zegal rapidly expanding its team and product range. 

The relentless onslaught of Covid-19 has sped up the need for online legal solutions for small businesses in the UK. Zegal’s all encompassing platform brings virtual legal counsel directly to  the users and gives them the capability to complete their own legal work online.

Zegal’s UK partner 360 Business Law has been selected by Zegal to deliver legal advice to its UK clients. Clients using Zegal’s contract management application can now access a free 30-minute consultation with a lawyer at 360 Business Law.

Robert Taylor, CEO and General Counsel at 360 Business Law says, “We are delighted that Zegal has selected us to support their UK clients. Zegal has an excellent contract management application. It is ideal for SME users, giving them access to a vast range of the very latest contractual documentation which they can adapt to their specific needs. Our lawyers are on hand to advise them, answer their questions and help them complete their contracts.”

Zegal Founder, Daniel Walker, says “Smaller businesses are the backbone of the UK economy and have borne the brunt of the tough measures we have faced over the past year. I’m delighted that Zegal is part of a broad movement in professional services to help smaller businesses adopt digital technology as we move to a new business as usual.”

For more information and/or interview requests please contact Alicia Walker at alicia.walker@zegal.com 

Linkedin | Facebook | www.zegal.com 

ABOUT ZEGAL

Zegal is the end-to-end platform for the legals smaller companies need. 

Our story

Zegal was founded in 2014 by lawyer friends Daniel Walker and Jake Fisch. Having been a part of the system that preserves quality legal advice only for those that can afford it, the two were determined to build a model that delivers the ‘corporate law firm’ experience to small business.

Today Zegal is the world’s only end-to-end platform for smaller companies to create, negotiate, and sign both the simple, and complex contracts they need to run their business, with expert legal advice, 100% online every step of the way. Since our launch, we have helped more than 20,000 companies close commercial contracts, run leaner HR teams, and enter new markets. You can use Zegal for your company in the UK, Australia and across Asia. Make your legals simple.

ABOUT 360 LAW GROUP 

360 Law Group, a Times Newspaper Top 200 UK Law firm in 2020 and 2021, is constantly seeking to challenge the status quo in order to ensure the most efficient, cost-effective and high quality client service possible.

360 Law Group operates a virtual network of lawyers through a secure cloud-based IT infrastructure. The firm provides businesses and consumers with something that had not previously been available from a single group of companies – the ability to offer clients a choice in how they engage with lawyers; on a regulated basis or on a lower cost, unregulated basis.

It was the first UK provider of subscription legal services on a global basis, and the first law firm to offer its services on both a regulated and unregulated basis.

 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

Start managing your legal needs with Zegal today

BECOME A ZEGAL REFERRAL PARTNER

READ MORE: UK Startups: Essential Legal Documents

READ MORE: New April 2020 tax rules in UK and how to comply with IR35

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