Barristers Feature Page 16
Enterprise Act 2002 (EA 2002), he says, have also meant a reduction in the number of administration applications dealt with in court and an increase in the speed with which trustees in bankruptcy move to recover dwelling houses from bankrupts. Commercial law specialist, Stephen Cogley, of Quadrant Chambers in London, says EA 2002 has had a big impact on some areas of his practice. ‘The emphasis has changed markedly. Before the act there were a steady stream of cases arising out of administrative receiverships, as well as more standard retail banking disputes. After the act, the former subsided.’
Derivative work has been hit by the credit crunch, he says, and there are an increasing number of cases involving banking/ insolvency – particularly administration aspects – and jurisdiction disputes with parties pre-emptively starting proceedings in jurisdictions they perceive as more benevolent to avoid payment. Jonathan Hilliard, a barrister at Wilberforce Chambers, says the credit crunch has spurred many trusts to ensure their cash is safe, which is generating work for lawyers, as they strive to assess whether deposits previously considered to be low-risk are still safe and what redress might be available when funds are deposited with failed institutions. He says privacy concerns has created an increasing interest in several jurisdictions in alternative dispute resolution (ADR) for trust disputes. This has led to a focus on drafting an arbitration trust clause for use in trusts instruments; the International Chamber of Commerce has recently published a draft clause.
Hilliard says: ‘Arbitration clauses pose a number of challenges for trust lawyers, not least the ability to bind persons who haven’t signed up to the clause, such as minors, unborns and other beneficiaries. I expect the validity of such clauses to be tested in the courts.’ Trusts are not the only sector embracing ADR at present: Terence Mowschenson QC of Wilberforce Chambers says clients in his areas of practice – commercial, banking and company – are keener to settle disputes via arbitration or mediation, which has seen a corresponding decrease in disputes being resolved in court. ‘In part there is an increased desire to keep disputes private and to choose the composition of the tribunal,’ he says. Ashworth is an ADR convert: having initially been sceptical as to the prospects of achieving acceptable outcomes via ADR, he now sees it as a realistic alternative to litigation. ‘It is clear it is a very effective tool, providing all parties “buy in” properly rather than merely going through the motions to avoid criticism later in litigation. The effect of this was initially to reduce the number of trials, but more recently has been to prevent some cases from ever getting to the stage of being issued,’ he says. As the credit crunch and the global financial downturn grinds relentlessly onwards, no-one can predict what all the long-term effects will be. One thing is certain: it is going to lead to loss and those losing are going to look for someone to blame.
Andrew Charman of St Philips Chambers, says solicitors and valuers are likely targets as the decline in asset values means lenders enforcing security, on finding the security does not clear the debt, will look for other ways of recouping their losses. Seitler (pictured left) says: ‘Property professionals make mistakes like everyone else but they are often concealed when prices are rising. As Warren Buffett, said “only when the tide goes out do you discover who's been swimming naked”.’ Watson-Gandy predicts accountants are also going to get it in the neck. ‘Suddenly the accountant’s certificate, so cursorily skirted over when a loan was first issued, is being dug out of dusty drawers and pored over. Surely the accountant certified that his client was good for the loan? Accountants look an increasingly attractive target for litigation, backed as they are by the deep pockets of professional indemnity insurers.’ This, he says, has translated into claims against the professional indemnity insurers, while banks have also chosen to piggyback on the fiduciary duties owed by those professionals to establish the necessary trust relationship to enable them to bring tracing claims to follow the money to its ultimate recipients. ‘Given that inevitably the money will have passed from hand to hand and each unhappy recipient will need representation, this translates for the bar as long, complex and highly lucrative multi-party actions’ he says.
So it is not all doom and gloom.
Lucy Trevelyan is a freelance journalist
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