On Friday 30th January, Addleshaw Goddard invited TheJudge to run a seminar for their Insolvency Practitioner clients in light of the proposed deadline of 1st April 2015 when the current exemption for insolvency proceedings from the Legal Aid Sentencing and Punishment of Offenders Act 2012 is likely to be lifted.
Addleshaw Goddard invited many of their clients, including IP’s from Grant Thornton and BDO, to attend the seminar which talked about the measures that can be taken to increase insolvency practitioner’s chances of securing ATE with a recoverable premium. To read more about just some of these measures please read our blog.
Matthew Amey and Carolyn Holmes of TheJudge delivered the seminar, which received some great feedback from both the IP’s and Addleshaw Goddard. Many IP’s are looking for more certainty in terms of the insurers reducing their premium if the recovery is lower than anticipated. Whilst there is no clear solution to this problem, one of our markets is now offering a waterfall which ensures the IP and the law firm receive payment for their own fees before the premium is realised by the insurer. The ATE insurer and the creditor then make up the second tier of the waterfall, with insurers paid 80p in the £1. This leaves the creditors with 20% of second tier recovery. This is the only policy we’re aware of that pays the IP’s fees before the premium. This type of arrangement was very well received by IP’s in Friday’s seminar. The policy is only available in the run up to 1st April 2015, and only if a law firm sign up to the insurer’s facility. There is no additional cost for this waterfall, it simply forms part of the standard policy wording for the facility.
As well as discussing how IP’s can increase their chances of securing cover with a recoverable premium, Matthew and Carolyn also gave their predictions of the products that are likely to be available for insolvency cases when premiums are no longer recoverable, as is expected for 1st April 2015. One of the more popular premium structures with IP’s was the damages based premium (DBP). This is where the premium is rated as a percentage of the actual recovered damages rather than a percentage of the level of cover. DBP’s give the insured the certainty that the premium won’t be disproportionate to the amount of their recovery, thereby guaranteeing the IP the lions share. These types of policies are likely to be very popular for insolvency litigation post-April, particularly if firms start running cases on damages based agreements.
In discussions over coffee after the seminar, many of the IP’s were interested to learn about funding for lower value cases via Sprint. This is a new funding product that TheJudge have designed in exclusive collaboration with Burford Capital. IP’s were interested to hear that this product works out significantly cheaper than many of the other more traditional third party funding products in the market. Particularly as this can assist IP’s to run cases where there is a lack of funds in the estate. Many commented that this seemed better suited to insolvency proceedings which generally settle more quickly than other areas of litigation and where long due diligence periods can prolong the case unnecessarily. Sprint is designed to fast track funding applications as the funders’ capital is insured; therefore the funder does no due diligence but relies on the insurers risk assessment.
If you would be interested in arranging a similar seminar for your IP clients, or an internal seminar for your contentious insolvency team, please contact us on 0845 257 6058 or email us firstname.lastname@example.org