Dibbs sues Lloyd's defaulters for £3m

DIBB Lupton Broomhead litigators are issuing writs for more than £3 million against defaulting Lloyd's Names – the biggest tranche of legal actions yet issued on behalf of Lloyd's agents.

They will also be handling the first test case against Names, due in court on 21 September.

Up to 111 UK Names and 21 US Names will face at least as many writs from managing and members' agents, expected within the next few days.

The actions seek to recover £3.199 million.

This compares with 24 writs in May against 13 names totalling £213,000, and 97 writs in June against 54 Names totalling £691,000.

The agents are litigating on unpaid cash calls, where Names are refusing, rather than unable, to pay out on market losses.

Philip Holden, a partner at Dibb Lupton Broomhead, was seconded to the financial recovery department based at Lloyd's in order to co-ordinate agents' actions against non-paying Names.

Holden says that actions are being escalated to encourage a greater number of negotiated settlements and to slow down the outflow of cash from Lloyd's central fund, which covers losses when Names do not pay.

“It's important to establish that there is an effective downside to non-settlement, that is, an effective means of recovery under the 'pay now' clause,” he says.

Holden says cases against Names will test the “pay now, sue later” clause in Names' agency agreements, the effectiveness of which was already commented on by the Gooda Walker judge.

Agents were encouraged to take action against Names by the Lloyd's Corporation, which is providing the financial recovery department as a resource to help co-ordinate actions.