You know those consumer brands that somehow manage to be ubiquitous and at the same time almost invisible? The ones the collective psyche relies on to always be there, but that would shock you if they were marketed too heavily? Think Volvo, or perhaps John Lewis. In the lawyers’ professional indemnity (PI) market, the equivalent is Barlow Lyde & Gilbert.
Barlows has handled more reported negligence claims against law firms and solicitors in the past 12 months than any other firm. It acts for four magic circle firms and regularly receives instructions from three out of the five main legal insurers (The St Paul, Zurich and QBE), as well as the Solicitors Indemnity Fund (SIF) run-off panel.
Barlows is currently representing Hammonds, Mishcon de Reya and Pinsents in multimillion-pound negligence actions. Would you be surprised if you knew your insurer had instructed Barlows to defend you against a litigious former client? Probably not. But what if Barlows shouted about your case or fouled it up? It would be more earth-shattering than the family Volvo breaking down.
Just as the engineers on those models of automotive reliability toil frenetically behind the scenes to give people the safest and most uneventful car journey, you can bet that somewhere there is a Barlows lawyer in any number of firms (including yours), quietly killing off negligence claims. You can also be sure they will be working extra hard to make sure their presence does nothing to disrupt the smooth running of your firm or chambers. In this business, the word that matters is ‘discretion’.
The low-profile heavyweights
Barlows runs a core four-partner team known as the solicitors’ team (although it also routinely acts for barristers). All four members are acutely aware that quietness, discretion and virtual invisibility are the keys to the strength of their brand. The firm is a fixture atop the directory rankings for professional negligence. Consequently it is regularly called on to tackle the highest-value and most complex claims. If you do have one of the Barlows team in your office, you can bet they are working on something very serious. Which is why none of the individuals in the team believe profile-building is useful or important. The last thing a client would want, after all, is a famous professional indemnity lawyer. Imagine the cringe factor if people recognised them in reception.
Predictably, then, the four partners (Barlows senior partner Richard Dedman, solicitors’ group head Sarah Clover, Richard Harrison and Andrew Blair), do not want to be photographed. Initially, they did not even seem to want to be interviewed. Indeed, they start the hour-long interview slot doing their best impressions of blocks of ice. Blair, the biggest stoic, says little more than hello and goodbye.
Given that Dedman is the firm’s senior partner and cannot escape people knowing who he is, he proves the most comfortable and the first to thaw. But it is a tease – it is only to emphasise that his team likes to keep itself a secret.
“Law firms don’t want us to publicise our involvement,” he says. “It’s not good for their public relations.”
Harrison is next. He turns out to be the chattiest. Being a jovial type, he is quick to see the funny side of being part of the lawyers’ secret service.
“We’re often asked not to go to a law
firm’s reception,” says Harrison. “In larger firms you can be more anonymous – Clifford Chance have never worried about this – but for smaller firms and barristers’ chambers, it’s much more sensitive.”
Harrison illustrates this with an anecdote about a barrister he was once representing. First, he says, he had to call the lawyer on his mobile, not his landline. Next, he was instructed to wait beneath a window for the barrister (or a lackey) to throw down a set of keys to the annexe. “I wasn’t allowed to go anywhere near the clerks’ room,” he remembers. “Secretaries usually aren’t allowed to know there’s a claim, so when you call the lawyer involved you’ll say it’s about the ‘Bloggs matter’ rather than the ‘Bloggs negligence against the firm’. It’s not uncommon for us to be asked to send papers by courier rather than by fax.”
A wizard team
While they would be happy to don Harry Potter’s invisibility cloak for public appearances, the Barlows partners are not known as a shy and retiring bunch behind closed doors. The team is also consistently praised for its ability to stand up to the lawyers’ insurers, which are ultimately paying its bill.
Philip Knights, litigation partner at Maxwell Batley, is probably Barlows’ most satisfied customer. Last October, Barlows aided Maxwell Batley in defending a $70m (£42.4m) negligence claim from actuarial firm Watson Wyatt, the largest claim against a law firm since the demise of SIF in 2000.
Somewhat unusually, Barlows was instructed directly by Maxwell Batley to fight this case. Knights says one of the reasons he chose Barlows was because of its ballsy approach to the underwriters.
“They [Barlows] have a lot of self-confidence in their relationships with underwriters,” he explains. “Many professional indemnity solicitors are simply beholden to the underwriters and afraid of upsetting them – the underwriter pays the bill and is king. The biggest danger for the insured is to feel they are being ‘represented’ by a lawyer who’s just being told by the insurer what to do.”
It is easy to believe that Barlows will have stood up to the underwriter in Maxwell Batley’s case. Although it was facing a £45m claim, the firm was reportedly insured for just £20m. A bad decision on Barlows’ part could have meant the death of the firm, and the insurer would certainly have been jittery. It is hard to think of another decision Barlows could have made that could have better illustrated the team’s confidence.
So, there is no disputing that Barlows handles the most cases, wins the most cases and has clearly achieved market dominance. But is this a good thing for everyone? For large and complex lawyers’ liability claims, Barlows has a great deal of competition from Reynolds Porter Chamberlain. But then there is a yawning gulf between Reynolds Porter and firms such as Beachcroft Wansbroughs, which handles lower-value negligence claims.
The charge-out rate for a Barlows partner handling a negligence claim is estimated at £350 an hour, something the firm and the insurers that normally instruct it are happy with. This cost is, of course, passed on to the insured through their insurance premiums.
Some people argue that there is room for more firms offering cheaper rates in this market.
Barlows and Reynolds Porter’s monopoly on the lawyers’ liability market is historical, says Tim Roberts, a partner at PI boutique Plexus Law. The two firms were the main players instructed by SIF. When SIF collapsed in 2000 and open market insurers such as The St Paul and QBE took over, they inherited Barlows, and to a slightly lesser extent Reynolds Porter.
“As part of the fragmentation of SIF, what you found was that the insurers who came into the open market have tended to go with SIF’s main providers, which were Barlows and then Reynolds Porter, as well as regional firms for lower-value, simple claims,” Roberts says. “They [Barlows and Reynolds Porter] have created such a mystique around this high-level work that the insurers think no one else can do it. With solicitors’ professional indemnity rates going up all the time, there’s room for a shake-up in the market, with cheaper firms being allowed in.”
Roberts also points out that being the insurers’ favourite may not be good for an insured lawyer’s perception of Barlows.
“You have one firm with a monopoly,” he says. “Insureds could see them as being in the insurers’ pockets. It’s cheaper for the insurer to settle a claim, but the insured could want to fight it. They will be told, through Barlows, either settle this or take on the cost of the claim yourself, which could lead to resentment.”
According to Harrison, however, Barlows often manages to strike a balance between the insurer and the insured. “It’s our job to win the insured round,” he says. “Yes, we’re usually instructed by the insurers, but we normally manage, through determination, to achieve a consensus.”
This danger of being seen as the dominant firm, of having a monopoly, of being the insurers’ lackey, is one reason why the low-profile Barlows team should come out of the shadows. No, its lawyers do not want to be famous, but there is a need for them to build their profiles. This may mean they run the risk of somebody recognising them in reception, but staff will find out about a negligence claim against your firm eventually, so why not also have them feel confident that you have the best litigator for the job, and not just the insurer’s best friends, handling your claim?
Barlows on why claims happen
The lawyer failing to identify the client, eg not sitting down and stating in the letter of engagement who they are acting for and what it is they are supposed to be doing.
Misunderstanding what the client has originally asked you to do, eg in a share sale the solicitor does not work out if they are supposed to be acting for the company or the shareholders.
Other professionals and the solicitors not identifying their role in the transaction, eg the solicitor thinks the accountant is giving tax advice and vice-versa, and no one ends up advising on tax.
Conflicts of interest – there have been claims against firms by the client on the basis that the firm failed to reveal that it had a conflict.
Failure to supervise assistant solicitors, eg partners not doing this properly and the assistant failing to spot a difficulty that the partner would have noticed if they had been more closely involved.
Overenthusiastic advice – although this is more often something claimants will get wrong and solicitors are not general commercial advisers, solicitors are often sued for being too positive and not advising the client that they were entering a bad deal.
|Barlow Lyde & Gilbert: the cases|
|Football League and Hammonds||Hammonds||Investigating defence of possible £130m negligence claim against Hammonds relating to contract drawn up between the Football League and ITV Digital||Pre-action correspondence|
|Pesskin v Mishcon de Reya||Mishcon de Reya||£6m negligence action over Mishcons’ drafting of a contract||Awaiting High Court judgment|
|Bank Restaurant Group v Pinsent Curtis Biddle (now Pinsents)||Pinsent Curtis Biddle||Bank Restaurant Group suing legacy Biddle firm for negligence over the company’s demerger||Ongoing|
|Normans Bay Ltd v Coudert Brothers||Coudert Brothers||Clothing company suing Coudert for negligence over loss of chance||Ongoing|
|GA Moffat & 33 Ors v Burges Salmon||Burges Salmon||Burges Salmon sued for around £5m by 34 dairy farmers over alleged negligent advice relating to EU restrictions on European milk production||Ongoing|
|SITA v Watson Wyatt & Ors v Maxwell Batley||Maxwell Batley||Maxwell Batley sued for £45m in Part 20 claim by Watson Wyatt||Successful at first instance|