Lloyd's lawyers pull off syndicates auction

LLOYD'S of London's first-ever auction of places on syndicates has proved a major success for the corporation's lawyers.

The auctions resulted in £246 million of syndicate capacity being traded for a total value of £4.2 million.

The legal team, led by in-house solicitor Tim Cargill, spent six months building a unique auction mechanism.

Cargill was part of Lloyd's working party, assisted by consultants Freshfields.

He said that lawyers' role was “fundamental”.

“Lloyd's has quite a complicated structure, with people participating as investors rather than shareholders. It's a much more complicated legal framework, on to which we had to graft an auction system,” he said.

“You are basically buying and selling the right to an agency relationship.”

Both individual and corporate investors participated, although the breakdown of acquisitions is still being analysed by the corporation.

During the auction period, from 31 July to 24 August, 99 of the 170 syndicates were traded and around 8,250 offers to buy or sell were made over the four weeks.

“It's anticipated there will be an auction every year,” said Cargill.

Freshfields banking partner Guy Morton, who is also the firm's chief client partner for the Bank of England, worked with Cargill. Cargill left Freshfields last September to join Lloyd's.

Freshfields' greater role at Lloyd's, also a long-standing client, will involve implementing various components of the reconstruction and renewal document published several months ago.

One of the biggest tasks facing the firm is setting up Equitas, the new Lloyd's company which will be separate from the financial problems fuelling recent Names' litigation with agents.