There is surging demand for
asset finance barristers – and much of this is to help seize the
yachts and jets owned by the super rich.
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Troubled by high net worth
individuals who don’t pay their bills on time? About to enter a
dispute over title to a fleet of cruise ships whose owners have
just entered pre-pack administration? Then it is quite likely that
your case will end up in the hands of a set of London-based
barristers called Quadrant Chambers.
Situated opposite the Royal Courts of Justice
in a former 18th Century coffee house, and grandly adorned with
high ceilinged rooms and an entrance that gives the impression one
is entering an ancient villa, resplendently decorated as it is with
tiny Romanesque tiles, Quadrant is making a name for itself in the
recession-hit world of asset finance.
Business volumes generally at the set have
gone through the roof of late. This was reflected by the
announcement in The Lawyer magazine this summer that the set’s
year-on-year turnover rose more than any other chambers at the
English Bar, by 44 percent, from £15.8 million (€17.7 million) in
2007-2008 to £22.9 million. This was quickly picked up by first the
trade press, and then The Times newspaper.
An influx of recession-driven asset finance
work has significantly contributed to this upsurge in business
volumes. A year ago asset finance represented between 25-30 percent
of the set’s total business, yet now it represents a whopping 40
percent.
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By GlobalDataDefaults by the rich and famous on their
executive toys – mainly superyachts and private jets – are partly
behind this sudden upturn in new work. At the same time,
cash-strapped banks and finance houses are far more willing to put
up a fight to get back their asset than they were before the
recession, a point made clear by the set’s asset finance head,
Stephen Cogley.
“The emphasis has changed from getting
monetary judgements to actually recovering the assets where at
least the funder has something tangible, as opposed to a judgment
it may never be able to enforce,” he said.
Cogley runs through a list of ridiculously
expensive cars that recently have been the subject of asset tracing
actions by the set’s barristers after their wealthy owners
“defaulted on loans and then hid the assets”, including Bentleys,
Range Rovers and Maseratis. A lot of this work is sourced from the
law firm HBJ Gateley Wareing.
One of Quadrant’s silks, Nigel Jacobs, a
long-serving member of the set, has recently been involved in the
repossession of two super yachts on behalf of leasing companies.
The owners, household names and among the richest people on earth,
are the last people you would think to be unable to pay their
debts. However, as Cogley pointed out, they might be rich on paper,
but they or their companies might still have “cash flow
difficulties”.
This work is not, however, just restricted to
seizing assets and making sure debt payments are made. It often
also involves tracing assets around the globe and getting freezing
injunctions in the High Court and enforcing them in multiple
jurisdictions overseas.
In many cases, the client is based overseas
but the asset has a UK connection, hence the reason for going to
the High Court in London to litigate.
“At least half of our work is from
instructions by non-UK law firms,” said the set’s clerk, Gary
Ventura.
The barristers can also use another form of
attack – if a defendant breaches any court orders and refuses to
allow the lessor to repossess an asset then their legal advisers
can apply to a civil court to “have their directors’ committed to
prison or the assets of the company sequestered [forfeited]”, said
Cogley.
He added: “This is a powerful weapon in a
lawyer’s armoury and generally, if an order has not been complied
with, it is not too difficult to get a committal order.”
The job of freezing assets has on occasion
meant counsel at Quadrant have come into contact with the Serious
Organised Crime Agency (SOCA), which has a dedicated asset freezing
unit. Lessors and SOCA have on occasion competed for who has the
superior rights for control of frozen assets but, said Cogley, any
disputes “have been resolved” and SOCA has “backed down” before
cases reached court.
Defaults on lease payments by owners of
corporate jets is also keeping the set busy.
Robert Lawson QC has seen a rise in defaults
generally in the aircraft lease sector, but “particularly in
relation to executive jets”, according to Cogley, who asked the
set’s key asset finance counsel before our meeting about key pieces
of work they are currently engaged in. Matthew Reeve, meanwhile, is
involved in a £5 million title dispute over a Hawker aircraft.
It is not just, however, yachts and private
jet related work that is keeping Quadrant’s barristers busy. The
set has always had a foothold in the ship sector, and billings for
ship finance work have grown year-on-year by between 40 and 50
percent. A significant number of new instructions in this sector
involve banks threatening to “pull the plug” issues around
refinancing, said Cogley.
Another reason for the influx of work is
linked to the collapse of ship values. In these cases, ship
manufacturers have made drawn downs on bank loans they set up to
finance new vessels. However, the ships have entered negative
equity, and consequently the ships’ value is worth less than the
amount they have drawn down. The banks, as a result, are now
seeking to recover the difference between the draw down and the
ships’ value, or to renegotiate deals on less favourable terms.
In some cases, embattled vessel owners have
entered pre-pack administrations to give their companies a
breathing space, Cogley said.
There is also no shortage of commercial
aircraft finance work. Lawson QC is advising on the repossession of
a Boeing 737 on lease purchase and is involved in a dispute over
payment defaults on a fleet of leased Airbuses, while it is also
advising on the seizure of a fleet of £31 million fleet of aircraft
– because rental payments for engines leased by Rolls Royce Finance
had not been paid.
Quadrant has clearly managed to spread its
tentacles far and wide from its roots in shipping, and it has
changed dramatically since even five years ago when it was called 4
Essex Street. Competition remains intense at the Bar for asset
finance litigation, and now more than ever, but Quadrant appears to
have got a head start through careful marketing and an aggressive
growth agenda.
Shaking off the old image
You might well be forgiven for
viewing barristers as a rather antiquated group of professionals,
so engulfed in traditional and privilege that the realities of the
modern world seem to pass them by.
Quadrant Chambers, however, is keen to dispel
this image, and has taken the unique and major step of hiring
someone from outside the legal sector entirely to manage the
set.
Tim Gerrard is not your usual chief executive.
Before joining Quadrant in March this year he was chief operating
officer at Jersey-based fiduciary and corporate services business
Hawksford International.
He had served there for just six months, and
before that Gerrard, who began his career in the Royal Air Force
where he served for some time as a Wing Commander, worked for seven
years as managing director of group services at DTZ Holdings Ltd, a
real estate consultancy.
The bulk of other English chambers rely on
their senior clerks to oversee not just chambers’ diaries and
market the set, but also, in tandem with busy and not necessarily
commercially-minded barristers, plan strategy, oversee corporate
matters and do such things as talk to the press and host cocktail
parties.
A small number have gone down the chief
executive route – but almost all of them, with the exception of
Gerrard, have had legal backgrounds.
Coming from a separate industry entirely
helps, said Gerrard: “Because of my background, I have first-hand
experience both at strategic and operational level, of running
small and large professional services firms and of all of the
functions that go to support them.”
One thing he has tried to do is to dust off
the set’s old image. Stephen Cogley, who runs the set’s asset
finance business, complains that former, now eminent members of his
set still regard Quadrant, which used to be called 4 Essex Street,
as a “wet shipping set” – the wet referring to legal disputes
arising out of events that happen at sea, such as collisions.
Things have changed dramatically, however, and
Gerrard is keen to tell the world that the firm might have
originally been a shipping set, but it has since taken on whole new
business lines – most transport related. Besides asset finance they
also include commodities, insurance and reinsurance, travel,
energy, construction and arbitration.
This contrasts with many sets – including the
most highly esteemed ones – that prefer to see themselves as
straight banking sets, but which don’t break down their work into
separate categories in the same way that Quadrant now does.
Intense marketing is now also part of
Quadrant’s major strategy for growth. It recently went to visit the
law firm Bedell Cristin in Jersey and Reynolds Porter Chamberlain
in London – both which could spawn new asset finance work – and
soon it is off to see an in-house solicitor in London and
provincial solicitors in Birmingham.
Gerrard now must put his commercial mind to
ensuring the current influx of work continues once the recession
ends.
Quadrant Chambers: key
stats
Total turnover:
£22.9m
Asset finance: 40% of
business
Key
asset finance clients: Holman Fenwick Willan, Ince
& Co, Clyde & Co, Read Smith, Drew & Napier, HBJ
Gateley Wareing, Waltons & Morse, Blake Lapthorn
Junior barristers doing substantial
asset finance: Stephen Cogley, David Walsh, Natalie
Moore, Paul Henton, Emmet Coldrick, Ben Coffer and Stephanie
Barrett, Matthew Reeve, Tim Marland, Paul Toms, Turlough Stone,
John Kimbell
Senior barristers doing substantial
asset finance: Nigel Jacobs QC, Robert Lawson
QC
