Firm in bitter litigation with insurance broker Lockton
Collyer Bristow is heading into mediation today (3 October) in a bid to stave off the financial meltdown it claims would ensue if it loses a courtroom battle with its insurance broker.
The firm and two ex-partners are joint defendants in a separate case being brought by 500 investors in a complex investment scheme known as Innovator One, which Collyer Bristow is said to have promoted. However, the firm alleges that Lockton Companies International was negligent when it arranged the firm’s insurance cover for the year the Innovator One claim affects.
As a result, the firm says, it would be left short of up to £50m to pay claimants should it lose, putting the firm’s future in jeopardy. It has therefore launched an action against the broker, with the firm, six partners and two former partners named as claimants.
The firm said its situation has been made more precarious because earlier in the summer Mr Justice Blair refused to expedite the Lockton dispute, meaning that when the firm faces the Innovator One claim on 17 October its dispute with the broker will not be resolved. The terms of this week’s mediation are confidential.
The firm’s counsel, David Edwards QC of 7KBW, told Blair J at the July hearing: “Without Lockton’s liability being established in advance [of Innovator One] the likely consequence of an adverse judgment against my clients, either immediately or shortly thereafter, may well be the bankruptcy of the individual claimants […], the withdrawal of their practising certificates and the collapse of the LLP.” The firm saw the risk of bankruptcy and the LLP’s collapse as “very real” and “a cause of discomfort and concern”, he added.
Crown Office Chambers’ Michael Harvey QC, appearing as counsel for the broker, told the court that fears over the financial future of the firm were ill-founded. “If there was a fear the guillotine was going to come down and [Collyer Bristow] was going to be made bankrupt overnight, there might be some justification for taking that unusual course [of expediting the trial],” he said.
Following the Innovator One judgment, which is expected to be appealed by the losing side, the firm will be back in court to try to force its brokers and insurers to indemnify the claims.