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… and more to come as London’s leading insurance firms predict ‘tidal wave’ of litigation
Competition in the insurance sector is to reach boiling point as firms look to capitalise on a predicted tidal wave of litigation.
The upsurge has been highlighted by the results of several EC3 firms that reported double-digit growth - contrasting with the majority of results so far this year.
Today (29 June) insurance giant Clyde & Co has become the latest to post results that are the envy of its corporate-led rivals. Clydes’ turnover for 2008-09 was up 17.8 per cent, from £157m to £185m.
It also benefited from its investment in the US market, much of which is litigation and arbitration-based. The firm’s two offices in the US saw a phenomenal 200 per cent rise in revenue over the past year.
“We’ve moved into profit within two years [in the US],” said Clydes chief executive Peter Hasson. “We’re seeing good-quality work in US complex disputes.” Clydes’ results, along with those of a handful of other EC3 firms that have already posted hikes in revenue, are being seen as precursors of an insurance litigation wave.
Norton Rose, which has a large insurance contingent in its practice mix, helping revenue rise by 6 per cent to £314m, has also seen an upturn in insurance litigation stemming from the US.
One Norton Rose partner told The Lawyer: “There’s been the start of an upswing, the [insurance litigation] market is returning after seven years of low activity.”
John Young, senior partner at Lovells (up 11 per cent to £531m), said: “Non-life work is insulated from the credit crunch. The London market’s walking around with a smile on its face.”
Ince & Co, which has a strong marine practice, unveiled a 23.5 per cent turnover rise at the year-end to reach £79.4m from £64.3m a year earlier.
Kennedys, which has focused on the growth of a volume arm over the past year, reported a 30.7 per cent rise in turnover to £67.3m. It is the firm’s largest year-on-year growth in more than five years.
Beachcroft, meanwhile, has also reported its largest year-on-year turnover increase since the 2005-06 year-end, up 6 per cent, from £114m to £121m.
One leading lawyer said that any “tidal wave of litigation” would be dependent on the quality of the insurance industry’s second quarter results, which are due to be published next week.
“That will determine where the industry goes,” he argued. “Does the industry consolidate, in which case there’ll be corporate work for lawyers, or does it stop the cashflow, in which case there’ll be a surge in litigation because reinsurers will stop paying out?” the source said.
Lawyer movement in the sector has been rampant over the past six months as partners have started to reposition themselves with firms that consider insurance a central tranche. As one insurance partner said: “We’ve never seen so many insurance partners on the move. They are all chasing the London insurance market.”
In the UK Barlow Lyde & Gilbert has lost a series of partners to rival firms, including Roger Doulton, Neil Beresford and Toby Rogers, who joined Clydes in May (The Lawyer, 4 May).