Similarly, unearthing exactly how much asset
finance departments of law firms bill each year is no mean feat.
The main problem is the number of variables involved – not all such
departments include billings derived from litigation and insolvency
work, while others do. Also, some do lots of ship finance, which
normally earns more than mid-ticket advice work (although given the
poor state of ship finance right now, this might not be the
case).

Despite all this, last month Leasing
Life gained a snapshot impression of how asset finance
departments of law firms are faring based on approximate percentage
increases/decreases in billings during the first half of this year
and also last year.

There were many reasons for being pleasantly
surprised – in almost all cases billings are up, and in some cases
they have risen dramatically. Even those firms which do
predominantly ship and large ticket finance work (admittedly not
the main areas of coverage, both in this magazine generally and in
this survey) appear to be resourceful enough to keep going in spite
of the downturn.

This snapshot was gleaned from in-depth
interviews with many of the law firms with major asset finance
departments – which we also profile on pages 22-26. The reasons for
this growth are dealt with in the profiles, although across the
board rises were linked to more litigation and fraud-related work,
more refinancings and restructurings, and an influx of receivables
and portfolio sales.

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Being as they are on the front line in the
largest disputes, frauds, deals and insolvencies around, asset
finance lawyers in private practice provide an invaluable insight
into the state of the industry in which they work. Therefore, on
the following page, based on interviews with key lawyers in the
leasing industry, are some topics and trends which serve as a guide
to the state of UK leasing now and into the future.

Lawyers have been handling some extraordinary
work, with more in the pipeline: some vast in scale, and much of it
unique. Few can beat, for example, the work done recently by Howard
Cohen, the finance partner at law firm Salans, to do with the sale
and purchase of $300 million (€203 million) of car finance
receivables, or the disposal of £65 million (€72 million) of local
authority lease receivables by nine lessors to just one buyer, a
considerable deal in which Morton Fraser was heavily involved.

On the fraud front it is hard to decide which
case has been most significant (although a case dealing with
alleged multiple financings involving churches stands out), while
asset repossession work has dominated the daily grind of many asset
finance lawyers. In the private jet and yacht worlds, Alan
Cunningham and his team at DWF have been particularly busy, thanks
in part to instructions from the likes of Kaupthing Singer &
Friedlander.

The recession has meant lawyers have also been
dragged increasingly into restructuring existing deals (for
example, arranging payment holidays), from rejigging contracts to
include set off issues, through to changes to standard
contracts.

The nature of asset finance lawyers’ work is
likely to change, particularly as regulators take a close look at
what is going on in the leasing industry.

Jon Kelly, head of asset finance at Lester
Aldridge, commented: “The government has
turned the spotlight on the finance industry. It must only be a
question of time before further regulation is introduced which may
impact on the leasing industry.”

On this point, DWS partner Matthew Harvey foresaw
that “tighter financial regulation will increase the burden on
lessors, especially those that are bank-owned”.

Accountancy changes will also have an impact,
as Kath Shimmin, head of asset finance at Blake Lapthorn, noted:
“The upcoming restructuring of capital
adequacy rules will undoubtedly have an impact on asset finance,
particularly on funding models and the price of
funding.”

Shimmin also expects to see “specific sector-based issues facing the asset
finance industry, like waste disposal, renewables and
recyclables”.

These future challenges mean yet more work for
asset finance lawyers who, it appears, are already busy, in spite
of the downturn that is affecting their clients.

Law firms’ billings