Super Buddy and Inter-Trust Management Support
In order to successfully and efficiently improve performance a Foundation Trust ("the Receiving Trust") was seeking to 'buddy' with another Trust ("the Buddy Trust"); sharing its knowledge, experience and resources.
A buddying agreement was required in order to set out the assistance to be provided by the Buddy Trust and its obligations to support the Receiving Trust. The agreement also set out the obligations of the Receiving Trust and the oversight role of Monitor.
We drafted a buddying/interim management agreement with the following key features:
- Responsibility and accountability – it was necessary to be very clear that the board of the Receiving Trust remained solely and exclusively accountable and responsible for all aspects of the Receiving Trust's performance, and that no such accountability or responsibility rested with the Buddy Trust.
- Support workstreams – the agreement identified ten support workstreams and sought to map out the support to be provided within each, recognising that the precise details may change over the course of the agreement.
- Quality and cooperation – the agreement set out the standards to which the Buddy Trust would provide the support and the obligations incumbent on its staff, whilst also acknowledging that for the arrangement to be effective, the Buddy Trust would require cooperation from the Receiving Trust and access to its premises, personnel, data and other facilities. The agreement also set out clear arrangements for monitoring and reporting, including escalation provisions in the event of a major incident.
- Termination – in addition to standard termination clauses, the agreement provided for the Buddy Trust to terminate without notice, in certain circumstances, in the event that i) performance of the agreement impeded the effective discharge of its statutory obligations or compliance with its licence or constitution, ii) it was required to withdraw by a body with a legal right to do so, or iii) it identified circumstances that could lead to serious reputation damage.
Overcoming the challenges
It was particularly important to bear in mind the risk of shadow directorship and the restrictions on Foundation Trusts delegating their powers beyond a committee of their directors. We addressed these by expressly stating that i) the Buddy Trust did not have any executive function in relation to the Receiving Trust and was acting in an advisory capacity only, and ii) the board of the Receiving Trust retained all decision-making powers in respect of the Receiving Trust.
It was necessary to be clear as to how the Buddy relationship fits within the wider regulatory regime that the two Trusts are subject to. To do this, we ensured that the agreement stated that i) the funding for the support was made available by the Secretary of State to Monitor, who administered it on behalf of the Receiving Trust, ii) Monitor had oversight of the support provided by the Buddy Trust, and iii) nothing limited Monitor’s ability to take action against the Receiving Trust in respect of that Foundation Trust, or against the Buddy Trust in respect of that Foundation Trust.
Whilst the different support workstreams were largely known at the time of drafting, it was acknowledged that their precise content would change over the course of the agreement and the legal documentation needed to reflect this flexibility.
Funding was to be provided on the basis of support actually provided. However, for cash flow reasons, payments were made monthly in advance, based on the estimated support to be provided in that month. This required the agreement to set out a mechanism through which, each quarter, the actual support provided was compared with the estimated support and reconciliation payments made accordingly.
One of the main challenges was to determine who owned any intellectual property rights ("IPR") created as a result of the provision of the support. Both the Receiving Trust and the Buddy Trust had respectable claims for ownership of such IPR in different circumstances. It was therefore necessary to set this out clearly and include reciprocal licence provisions.