Banking business builds a busier Bar

Negligent advice, housing repossessions and the legal complexities surrounding demutualisations are creating a growing workload for barristers in banking & finance.

Barristers in banking and finance work are finding life busy, although most admit that competition with law firms for the work is greater than ever.

'A lot of solicitors are trying to retain as much of this kind of work in-house as they can,' says Terence Mowschenson QC of One Essex Court. 'However, they do go off to the Bar for second opinions as it's always helpful to have a fresh eye look over the matter.'

Despite the fact that solicitors are retaining work, many areas are enjoying growth, and as bankers deal with a host of issues, specialisms are continuing to develop.

Banking negligence is one which is currently providing work for the Bar. According to barrister Mark Watson-Gandy of 3 Paper Buildings, 'everyone's unhappy with their banks at the moment, although they are improving. The public gets a rough deal from them and banks are immune to action'.

Over the years, customers have tended to go to banks for working advice on their finances, a problem which has generated much litigation when a business goes belly-up, he says.

Another specialist area which has been evolving ever since the landmark Barclays Bank v O'Brien case is mortgage possessions. The Barclays case set out the ground rules for banks on the steps they should take regarding a wife's surety when she agrees to put up security either in the form of a legal charge or guarantee for the repayment of her husband's debt, or the debts of a business in which her husband alone has a direct financial interest.

Barclays was represented by John Jarvis QC of 3 Verulam Buildings, along with fellow chambers member William Blair QC, and banking expert, Professor Ross Cranston.

The legally-aided client was represented by juniors Simon Buckhaven and Bernard Devlin of 1 Harcourt Buildings.

Several Court of Appeal decisions have since considerably reduced the scope of relief given to wives as established in O'Brien.

These include Midland Bank v Massey (1995); Banco Exterior International v Mann (95); Bank of Bermuda v Reyard (95); Midland Bank v Serter (95) ; Barclays Bank v Thompson (97); Royal Bank of Scotland v Etridge (97).

Run-of-the-mill repossession work the bread and butter of junior barristers is nowhere near the levels it reached during the recession. However, banking regulatory matters are growing, as is work arising when building societies become banks, due to the amount of legal complexities involved.

The Bar is also seeing a considerable amount of work on property valuations, particularly in light of the recent Banque Bruxelles Lambert decision which laid down a new test on how professional advisers should conduct valuations. The Bristol & West Building Society litigation also considers this issue.

Meanwhile, the Investors Compensation Scheme litigation was laid to rest with Lord Hoffman's ground-breaking decision last year in Investors Compensation Scheme v West Bromwich Building Society.

On the financial services side, SWAP issues have tailed off although there is still remaining litigation to be settled.

However, while the Far East stock market crisis may be putting a damper on financial transactions around the world generally, the crash may mean the ringing of cash registers for the Bar.

Barristers in some of the chambers dealing with financial matters are finding themselves getting queries on the legal implications of the crisis, particularly around companies which are attempting to get out of contracts.

'Much advice is being sought on the effects of the crisis but it is too early yet for litigation,' says Marcus Smith of Fountain Court. However, there is a feeling that in the coming months barristers will see a steady stream of this activity.

Another issue which is also curiously beginning to rear its head again is debt re-scheduling in third world countries a problem emanating from the 1980s when various countries entered into re-scheduling arrangements.

Barristers report on the beginnings of litigation on this front coming to fruition, particularly with regard to recovery for third party guarantors. One for the future will be the

European Monetary Exchange which looks set to pose many legal conundrums in the months and years ahead.

Interesting times must surely lay ahead for the banking and finance Bar.