My small printing business is struggling due to the credit crunch and I am being forced to cut my workforce from 30 people to around 17. Would this be considered a mass redundancy and if so, are there any legal requirements to complete a review or consultation before selecting the unfortunate ones? Also, how do I go about announcing it internally?

Legal obligations are more complicated where employers propose to make redundant 20 or more employees within 90 days.

So, if you envisage increasing the number of potential redundancies to 20 over a three-month period, you should obtain specific legal advice.

You are under a legal obligation to ensure that any redundancies are fair.

While this is still a proposal, you must consult with all employees about how to avoid, reduce or mitigate the effect of any redundancies.

If redundancies go ahead, you must fairly select on objective rather than subjective grounds. Employees should be consulted about the criteria. Each redundant employee would have a right of appeal.

For the announcement, the most important thing is to ensure that this refers to a proposed redundancy to ensure full consultation on ways to avoid or reduce any potential redundancies.

Stuart Jones is an employment partner at Weightmans, a law firm

I am the landlord of several retail units and have been approached by some of the tenants wishing to pay the rent monthly instead of quarterly in order to help their cash flow. Should I agree to this and, if so, how should such an arrangement be documented?

Take care in considering such a request.

Consider if the tenant has paid rent promptly prior to this request. Will it affect your cash flow? If so, this might be a good opportunity to find a more desirable tenant, or enforce the guarantor’s obligations. However, this can be time-consuming and expensive. You may also risk ending up with an empty property.

If you agree to monthly payments, document the agreement with a side letter, signed by all parties. If monthly payments are to be permanent, use a deed of variation. Your solicitor will advise on how to proceed.

Make sure that it clearly records the duration of the agreement – consider a fixed period to enable an opportunity to review. If the tenant defaults, the concession should automatically end and the balance of the quarter’s rent should become immediately payable. The deed of variation should also be a temporary arrangement for the benefit of the current parties only. Be careful not to inadvertently release a guarantor from his or her obligations. Finally, ensure that you retain confidentiality: you may not want other tenants to find out about the arrangement.

The key is to protect your investment. Take professional advice to ensure that you do not limit your future options.

Owen Walsh is a solicitor at Thomson Snell & Passmore, a law firm

I recently set up a recruitment agency and, while I have no immediate plans to sell, I have heard it said that you should begin exit planning early to ensure the best outcome. Can you give me any advice?

The key to a successful exit is to build value that outlasts your involvement. The crucial element in your plan must be to develop your second-tier managers so that they can take over all your responsibilities. It is important to have an efficient finance director and sales director to ensure investor confidence. Building a great management team also opens up the possibility of a management buyout.

Any investor will want to see that the business is operating to a clear strategic plan and that it is achieving the key milestones in that plan. Within the plan must be cash flow forecasts that ensure you have headroom to deal with unforeseen shocks such as interest rate rises or bad debts, as well as coherent brand-building activities.

The profitability of the operation determines the price you will achieve, and this must represent an attractive return on capital to a buyer. Don’t overlook the need to ensure there
are no value destroyers
that due diligence will uncover.

Finally, timing is all. In the current economic climate, any exit will achieve a lower multiple of earnings than in an expanding economy.

Paul Saunders is a director in the recruitment finance division at Lloyds TSB Commercial Finance

I run a retail chain and have been having problems recently with my supplier. We paid up front in January for a year’s worth of stock to be delivered on a monthly basis. We have received nothing from them for the past few months and when we have, the orders have been wrong. We are wary about taking legal action because of the cost but have been contacted by a company that offers funding for legal disputes. How does this work?

Third-party funding is a growing market in the funding of litigation. The funding company will pay your legal costs and disbursements during the litigation. In return, the funding company receives payment, in the event that you succeed in the claim, contingent to the value of the sum recovered by you in the proceedings. The funding company will look to receive between 20 to 30 per cent of the net recovery.

While it is not a prerequisite for funding, it is likely that the funding company will want to have 25 to 30 per cent of the legal fees covered by you or under a conditional fee agreement with your solicitor, commonly known as a “no win, no fee” agreement.

The risk for those fees will therefore be borne by your solicitor and not the funding company.

Mark Tudor is a partner at Matthew Arnold & Baldwin