First Name action could set off Lloyd's avalanche

THE FIRST legal action taken by Lloyd's of London agents against a Lloyd's Name could start an “avalanche” of cases against other individual defaulting Names, according to the agents' lawyers.

The action, against Dr Andrew James Higgins, was the subject of an Order 14 hearing last week and should result in a judgment within days.

Dibb Lupton Broomhead partner Susan Dingwall, overseeing all agents' cases, said the recovery action by client Merchant & Eliot Underwriting against Higgins would be “a catalyst for other Names to pay their debts”.

“It will be a precedent because it will establish the broad principle of the 'pay now, sue later' clause [of Names' agency agreements]. It's going to have a huge significance,” said Dingwall.

“There are well over 100 other writs ready to be served on other Names. There will be an avalanche of them.”

Defending Higgins, Michael Freeman, of London firm Epstein Grower & Michael Freeman, said: “The significance is considerable. Lloyd's is placing a huge stake on being able to collect from the Names for the first time, by trying the agency route to circumvent the Central Fund cases. We say it's totally misguided and I believe the application for summary judgment should fail.”

Lloyd's attempts to collect cash owed to its Central Fund by Names are frozen until its High Court action against Clementson in January.

But other lawyers in Lloyd's litigation are at odds over the significance of the case.

SJ Berwin partner Richard Slowe, acting for several Llo-yd's action groups, said: “It's an interesting sideshow. Equally, it's a gamble by Lloyd's.”

Both sides in Higgins expect to appeal the Order 14 judgment. If it goes to the High Court, an expedited trial will be over by Christmas.

Lawyers also say media reports of the implications of Brown v KMR Independent Services, where Name Richard Brown won up to three-quarters of a million pounds damages because of member agents' negligent advice, overstate the impact on other cases.

Brown's lawyer, DJ Freeman partner David Tiplady, has told the many solicitors contacting him that similar cases can only be fought on a costly case by case basis, so action groups will be precluded from taking a group action.