Fraud and All That: Claims Against Professionals Who Know Too Much (Or Choose to Turn a Blind Eye)

Fraud and all that: claims against professionals who know too much (or choose to turn a blind eye)

Jamie Smith QC Helen Evans Hannah Daly

4 New Square

Professional Liability & Regulatory Conference

4 February 2020

This material was provided for the 4 New Square Professional Liability & Regulatory Conference on 4 February 2020. It was not intended for use and must not be relied upon in relation to any particular matter and does not constitute legal advice. It has now been provided without responsibility by its authors.

4 NEW SQUARE T: +44 (0) 207 822 2000 LINCOLN’S INN F: +44 (0) 207 822 2001 LONDON WC2A 3RJ DX: LDE 1041 WWW.4NEWSQUARE.COM E: [email protected]

Jamie Smith QC Call: 1995 Silk: 2015 "A fiercely intelligent silk who approaches a case from all angles.” – Chambers & Partners

“Ridiculously hardworking, very perceptive, highly focused and thoroughly charming.” – Legal 500

Jamie’s core practice area are areas are professional liability, insurance and professional discipline. He is ranked in the Directories in each area.

On the civil side, many of Jamie’s cases involve allegations of dishonesty and conspiratorial behaviour against professional persons. Jamie led the defence for Mishcon de Reya in the IAP matter, where all claims were dismissed and an indemnity costs order was made – [2018] BCC 751 and [2018] EWHC 1145 (Ch). Jamie also headed up one of the solicitor defence teams in the marathon Accident Exchange litigation. He is currently representing a Midlands practice in respect of a £50m dishonesty/conspiracy claim arising out of a corporate restructuring.

Helen Evans Call: 2001 Helen Evans is a leading barrister practising in professional negligence, fraud, commercial, disciplinary and insurance work.

Helen is ranked by the legal directories as a leading junior in the fields of professional liability, insurance and professional discipline. In 2019 she was identified by Who’s Who Legal as one of the two most highly regarded juniors at the professional negligence bar. Many of her cases have a company or insolvency element or involve fraud or economic torts.

Helen is often instructed to obtain urgent freezing and other injunctions and is a calm and persuasive advocate under pressure. Helen is currently involved in numerous sets of proceedings against solicitors who have misappropriated client funds- or the accountants who did not identify the defalcations. In the last 6 months alone she has appeared at multiple freezing, proprietary, Norwich Pharmacal and committal hearings in cases brought by firms and their insurers.

Recent comments from the directories include: “Formidable on paper, on her feet, and in cross-examination.” “Helen Evans stands out as one of the most highly regarded barristers in the field. Peers regard her as “thorough and meticulous” and say she “can unpick the most complicated of cases”.” “Very bright and intuitive, she gives solid commercial advice.”

Hannah Daly Call: 2017 Hannah has a broad commercial practice covering litigation and arbitration. She has experience in a range of professional liability claims, civil fraud and offshore commercial and trust disputes.

Recent experience includes acting as Junior Counsel in a 4-week High Court trial to defend a firm of accountants accused of negligence and fraudulent misrepresentation. She is currently instructed in a large-scale IT arbitration involving claims for fraud and breach of contract. She also has experience of disciplinary proceedings.

Prior to joining Chambers, Hannah worked as a Strategy Consultant with Accenture, focusing on commodity trading and risk management in the mining, energy and soft commodity sectors. She was called to the Bar in 2017 as a Jules Thorn and Queen Mother Scholar of the Middle Temple.

Fraud and all that: claims against professionals who know too much (or choose to turn a blind eye)

Jamie Smith QC, Helen Evans and Hannah Daly

Introduction 1. It seems a long time ago now that Millett LJ told professional practitioners to go back to their simple causes of action at law, in Mothew. First, we had the rise and rise of equity. Now, claimants are developing a strong liking for suing professionals for either knowing too much (or choosing to turn a blind eye). We look below at some aspects of claims for unlawful means conspiracy and dishonest assistance; and offer some comments as to the insurers’ perspective on such claims.

Part 1: dishonest assistance

The elements of the claim 2. Dishonest assistance gives rise to an equitable personal remedy for compensation. C must show1: a. There is a fiduciary relationship (including a trust); b. There is a breach of duty by the fiduciary; c. D has induced or assisted that breach; and d. D did so dishonestly. 3. The focus of the claim is not upon the ‘primary wrongdoer’, but the ‘secondary’ assister: for example, a solicitor who pays money out from a firm’s client account at the primary wrongdoer’s direction, but in circumstances where he knows the money should not be paid in that way.

What is dishonesty? 4. The Supreme Court in Ivey v Genting2 in 2017 laid down what is now accepted to be the prevailing test to determine whether D is dishonest. There are two stages: a. First, the fact-finding tribunal must ascertain the actual state of the individual’s knowledge or belief as to the facts. This is a subjective test. The reasonableness or

1 See, generally, Lewin on Trusts (19th Edn) at paras 40-014 to 40-061. 2 Ivey v Genting Casinos UK Ltd [2017] UKSC 67; [2018] AC 391 (SC)

otherwise of his belief is a matter of evidence going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. b. Once that is established, the second question is whether his conduct was honest or dishonest by the standards of ordinary decent people. There is no requirement that D must recognise that what he/she has done is, by those standards, dishonest.3

5. The test in Ivey has since been applied in a number of cases where allegations of dishonesty are brought against professionals. Points to note are: a. In determining D’s actual state of mind, where a professional demonstrates in evidence that they understand the relevant professional obligation, then a tribunal may be slow to accept that they genuinely held an unreasonable belief.4 b. There may be some categories of professionals who are susceptible to other or additional requirements in order to be fixed with dishonesty. In Sofer v. SwissIndependent Trustees SA5, for example, it was necessary for the professional trustee to demonstrate an honest belief that his actions were in the interests of the beneficiaries. c. A ‘bad’ motive is not a prerequisite6, but the absence of motive is an evidential pointer away from dishonesty7.

Group Seven v Nasir and ‘blind-eye’ knowledge 6. Knowledge for the purposes of the Ivey test may be actual or ‘blind-eye’. Blind-eye knowledge was examined more closely by the Court of Appeal Group Seven Ltd v Nasir8. Two conditions must be satisfied: a. the existence of a firmly grounded suspicion, which is targeted on specific facts that may exist. Untargeted or speculative suspicion is not enough; b. a conscious decision to refrain from taking any step to confirm the existence of those facts.9

3 Ibid. at [74]. 4 See, for example, Uwen v General Medical Council [2019] EWHC 3483 (Admin). 5 [2019] EWHC 2071 (Ch) 6 SRA v Siaw [2019] EWHC 2737 (Admin) 7 MASNOL v. Cripps Harries LLP [2016] EWHC 2483 (Ch) at para [88] per Mann J. 8 [2019] EWCA Civ 614; [2019] 3 WLR 1011 9 Stated at [59] and [60] in reliance on the dicta in the House of Lords in Manifest Shipping & Co Ltd v Unipolaris Insurance Co Ltd (The Star Sea) [2003] 1 AC 469.

7. However, more generalised suspicions falling short of ‘blind-eye’ knowledge may be taken into account when the fact-finding tribunal is making findings about D’s state of mind; and then coming to consider whether that knowledge is objectively dishonest.10

How much does the dishonest assister have to know? 8. The Court of Appeal in Group Seven also tackled another point: was there a minimum content of knowledge that the alleged accessory must possess in order to be held liable for dishonest assistance in breach of trust?

9. Though it was unnecessary for the Court to rule on this,11 it nevertheless gave its provisional view that the Ivey test would be needlessly complicated by the introduction of a minimum content test. 12 So, it would seem, the test of whether you know and what you know, are part and parcel of the same enquiry.

The role of causation in dishonest assistance 10. The relevant causal link in these claims is between the loss and the breach which has been dishonestly assisted (not the assistance itself).13

11. The Court of Appeal confirmed that common law limits on causation (remoteness etc) did not apply in claims for dishonest assistance. It is necessary only to show: a. that the conduct in fact assisted the breach of trust; and b. that the loss directly resulted from the breach of trust.14

12. The effect of all this is that it may be possible for the dishonest assister to be liable to an even greater degree than an (honest) defaulting fiduciary, given the Court’s power to award compound interest.

10 Ibid at [61]. 11 Since it had found, and all parties accepted, that any minimum content of knowledge test would be satisfied if the defendant had blind-eye knowledge. 12 At [104] 13 See, for example, Madoff Securities International Ltd v Raven [2013] EWHC 3147 (Comm) at [340]: “It is not necessary to show that the assistance itself is causative of any loss” (per Popplewell J). 14 See the discussion generally in Group Seven at [106] to [111]. Though note that where an account of profits (rather than equitable compensation) is sought from the dishonest assistant, common law principles may apply: Novoship (UK) Limited v Mikhaylyuk [2015] QB 499.

Conclusion 13. Dishonest assistance enables claimants to sue professionals where otherwise there would be no legal duty to found a claim. Such contentions are becoming commoner; and claimants often misunderstand that, even under Ivey, the first stage of the test is difficult to surmount. A professional may be negligent and naïve. Other practitioners may have acted differently. But that is not enough!

Part 2: unlawful means conspiracy (“UMC”)

The elements of the claim15 14. This is a tortious cause of action. Suppose a claim is brought that Professional A was involved in an UMC with Client B and Third Party TP to cause injury to Claimant C.

15. C must prove16 that: a. A, B and TP enter into a combination or agreement or ‘arrangement17’; b. for A, B and/or TP to take action which is unlawful (the ‘unlawful means’); c. with the intention (but not necessarily the predominant purpose) of causing damage to C; and, d. C suffers damage as a result18.

The combination or agreement 16. The test: It is not necessary: a. to show the existence of an express agreement. The agreement may be tacit;19 or b. for all the conspirators to join the conspiracy at the same time,20 to communicate directly with one another, or even know of the identity or even the existence of all the other conspirators.21 For example, a conspiracy can be formed by way of a ‘chain’ (A

15 See, generally, Clerk & Lindsell on Torts (22nd Edn) at paras 24-98 to 24-107A. 16 Bearing the burden of proof on all elements: see Racing Partnership Ltd v. Done Bros (Cashing Betting) Ltd [2019] EWHC 1156 (Ch); [2019] 3 WLR 779 at para [290] per Zacaroli J. 17 Revenue and Customs Commissioners v Total Network SL [2008] 1 AC 1174, 1283 at para [213] per Lord Neuberger. See, more generally, JSC BTA Bank v Ablyazov (No 14) [2018] 2 WLR 1125, 1134 at para 9 18 Kuwait Oil Tanker Co SAK v. Al-Bader (No 3) [2000] 2 All ER (Comm) 271, para [108] per Nourse LJ; Racing Partnership at para [253] per Zacaroli J. 19 Kuwait Oil (above) at para [111]. 20 Kuwait Oil (above) at para [111]. 21 R v Griffiths [1966] 1 QB 589, 597G, R v Mehta [2012] EWCA Crim 2824 at para [36] and R v Shillam [2013] EWCA Crim 160 at paras [19-21].

communicates with B, who communicates with TP) or a ‘wheel’ (A communicates separately with B and TP, B and TP not being in touch).22

17. Whatever the nature of the combination, C must show that A was sufficiently aware of the surrounding circumstances for it to be said that: A deliberately combined to achieve a common end; and so, A was acting in concert at the time of the acts complained of.23 Put another way, however they may have combined with B and TP, it must be shown that A knowingly attached themselves to the same agreement.24

18. The upshot for professionals: Two aspects of the above test together render professionals susceptible to UMC claims (albeit such claims may be of highly questionable merit): (1) if B, as a client of A, has done something unlawful such as to injure C, A may have a connection with that ‘something’ by dint of having advised B; and (2) that the agreement or combination may be ‘tacit’ allows C to found a claim based on nothing more than inference from the fact of (a) the link between A and B (and/or B and TP) and (b) B’s (or TP’s) unlawful conduct.

‘Unlawful means’ 19. The test: There are two interlinked aspects to this element of UMC: a. a requirement that the acts/conduct involved are ‘unlawful’; and, b. that the acts/conduct were the means of inflicting the harm on C – ‘instrumentality’25.

20. What are unlawful means? a. It has been established that unlawful means can include both crimes and torts actionable at the suit of the claimant: Total Network at para [93] per Lord Walker. b. In Digicel it was held that non-actionable breaches of a non-criminal statute were not unlawful acts for the purposes of an unlawful means conspiracy. Morgan J declined to make what he felt would have been a “considerable sideways extension of the tort of conspiracy”.26 Further in UPL Europe & Anr v Agchemaccess Limited & Ors [2017] EWHC 1880 (Ch) at para [143], Proudman J held that the ambit of unlawful means conspiracy ought not to be extended so as to cover breaches of regulatory legislative provisions the

22 R v Shillam [2013] EWCA Crim 160 at para [21]. 23 Kuwait Oil (above) at para [111]. 24 R v Griffiths [1966] 1 QB 589, 599B-C. 25 See Racing Partnership (as above) at para [245]. 26 Per Morgan J at Annex I, para [62].

enforcement of which is the responsibility of a government authority where the relevant authority (in that case the HSE) had said that no prosecution lies. However, in Concept Oil Services Limited v En-Gin Group L & Ors [2013] EWHC 1897 (Comm) at para [50] Flaux J (as he then was) accepted that entering a transaction to defraud creditors within the meaning of s.423 of the Insolvency Act 1986 constituted unlawful means, although he did not strictly need to decide the point because there was also a deceit perpetrated on the claimants. Influenced by Concept Oil, in Avonwick Holdings Ltd v Castle Investment Funds Limited [2015] EWHC 3832 (Ch), HHJ Dight QC (sitting as a judge of the High Court) held that it was arguable that conduct entitling relief pursuant to s.238, 239 and 428 of the Insolvency Act 1986 constituted unlawful means.

c. Digicel was cited in argument in JSC BTA Bank (above)27, but the Supreme Court decided to leave open the question of the extent to which non-criminal acts such as (a) breaches of civil statutory duties, (b) torts actionable at the suit of third parties, (c) breaches of contract and (d) breaches of fiduciary duty were subject to the same considerations as crimes and torts actionable at the suit of the claimant: see JSC BTA Bank per Lord Sumption and Lord Lloyd-Jones at para [15].

d. In Racing Partnership Zacaroli J considered that for a civil wrong to constitute unlawful means, the means at the very least would need to satisfy the ‘instrumentality’ test (as above); and that, for breaches of statute, “considerations include whether the statutory provision was enacted for the benefit of a particular class of persons, and whether there is anything in the statute which indicates it was intended to confer a right of civil action” (at paras [245] and [250]).

21. The upshot for professionals: There are thus no clear boundaries as to what might constitute ‘unlawful means’. UMC claims against professionals may seek to rely on: a. Breaches of regulatory codes: in Accident Exchange the UMC claim was partly founded on alleged breaches of the Solicitors’ Code of Conduct 2007; b. Conduct (such as corporate restructuring or inter-company arrangements) involving breaches of duties by Directors and/or attracting relief under the Insolvency Act 1986: in IAP28 the UMC claim was partly based on breaches of fiduciary duties by Directors;

27 In contrast, neither Concept Oil nor Avonwick were cited in argument. 28 [2018] BCC 751 (Morgan J). See too MASNOL (above).

c. Professional reports alleged to be designed to persuade a third party that (say) a property is worth more than it really is: LIA v. Warwick Street (KS)29.

Intention 22. Test: It is clear that there is no need for A to have a predominant intention to injure C; but that an intention to injure should instead be ‘part of A’s thinking’.

23. There is current uncertainty as to whether A has to know – on an actual or ‘blind-eye’ basis – that the means were unlawful. As to that: a. Zacaroli J in Racing Partnership held that C must prove A had such knowledge (see para [287]); but, b. Judge Russen QC in Stobart Group v. Tinkler [2019] EWHC 258 (Comm) held that there was no such requirement of the tort of UMC (at para [573]).

24. There are dicta supportive of the proposition that intention is satisfied if A should have appreciated that injury to C might result: see Ablyazov at para 1330; but the better view is probably that foresight of damage is not enough31.

Conclusion 25. The tort of UMC may thus be seen to be a worrisome cause of action for professionals: a. It creates a legal link between C and A, where there might well otherwise be none. Indeed, the only individual with a civil remedy against A (or B or TP) may be an unrelated third party. b. The allegation that A combined or agreed with B and/or TP may be founded on inference alone with very little indeed to back it up. c. A may not have to done anything outside the confines of the professional relationship with B. The acts/conduct may be carried out only by B and/or TP. d. It may well yield a more favourable limitation analysis to C32.

29 [2018] EWHC 2877 (Ch) (HHJ Simon Barker QC) 30 “… a constructive intent derived from the fact that the defendants should have known that injury to the plaintiff would ensue”. 31 See Digicel (above) at Annex I, paras [79]-[84] 32 UMC is a tort with a 6-year primary period under s.2 of the Limitation Act 1980. S.32(1)(a) and s.14A do not apply. However, C will inevitably rely on s.32(1)(b) and/or s.32(2).

Part 3: the professional indemnity insurance perspective 26. What can and ought insurers do in both the short and longer term to preserve their right to pursue professionals caught up in claims of the type set out above?

The starting point 27. Although it is not possible to obtain insurance against liability for one’s own fraud or dishonesty,33 most modern composite PI policies require insurers to cover all ‘innocent’ insureds.

28. When a claim is notified, it is often difficult to know whether the so called ‘wrongdoer’ has in fact been dishonest, or whether the so called ‘innocent partners’ are as innocent as they seem. Who, if anyone, is entitled to an indemnity?

29. Also, does a claim for UMC connote fraud or dishonesty for policy purposes?

The long game: rights of reimbursement 30. Some but not all PI policies contain express rights of reimbursement against a dishonest insured. For example, the SRA’s Minimum Terms and Conditions (“MTCs”) entitled Participating Insurers to sue for such amount as is just and equitable having regard to the prejudice caused. Some policies, including those under the MTCs or the ICAEW equivalent, have ‘withholding’ clauses requiring firms to withhold assets belonging to the wrongdoer and pay them to insurers.

31. These rights can be useful in the long term, but they are not likely to help insurers if they need to move fast to protect assets in the hands of the professional in the short term. A right of reimbursement depends on insurers having paid first, and this creates problems in using these rights to seek early injunctive relief. This is because an applicant for an injunction needs to show that it has a good arguable and existing case against the defendant wrongdoer.34

A potentially shorter term tactic: subrogated claims allied with interim injunctions 32. If insurers want an urgent freezing order or other injunction, the only realistic answer often lies in urgently issuing a subrogated claim in the name of the insured firm.

33 Beresford v Royal Insurance Co Ltd [1938] AC 586 at p 595. 34 The Siskina [1979] AC 210 at 256.

33. There are a number of challenges that arise when having to formulate an injunction application in a subrogated claim at speed.

34. Type of claim against the wrongdoer: the claim issued against the wrongdoer to found the injunction application has to be squarely framed in dishonesty. This is because insurers will need to persuade the court that the wrongdoer is not in fact an insured under the policy and entitled to be indemnified rather than pursued by insurers. The way that a claimant frames its claim against the firm is not determinative of what the firm can allege against the wrongdoer.35 However, full details of the alleged dishonesty will need to be provided. This means pleading out both the facts and the cause of action based on dishonesty that applies to those facts.

35. What types of claim exist? It is not always easy to identify what types of claim based on dishonesty lie in the firm’s name against a partner or employee: a. Where there has been a payment away of a client’s assets in breach of trust, a range of claims immediately spring to mind, e.g., dishonest assistance or knowing receipt. These types of claim are unlikely to raise an eyebrow; b. Where a professional has been involved in something more unusual, such as an UMC, more creativity is needed. Are there express duties in the partnership agreement/employment contract? If not, what implied duties of honesty exist? Judges take more persuasion that this type of claim passes the hurdle of a ‘good arguable case’.

36. Some downsides from a defence perspective: seeking injunctive relief will make it very difficult to defend the substantive incoming claim against the insured. The former requires overt demonstration that the professional person has acted inappropriately; the latter requires some basis to suggest the insured did nothing wrong.

37. Impact of a reservation of rights: insurers’ common practice of reserving their rights over cover in claims involving dishonesty can have unanticipated consequences when it comes to seeking injunctions against wrongdoing partners. This is because it is a pre-requisite of any injunction that the applicant provides a cross-undertaking to pay any damages and costs that the court finds has flowed from a wrongfully granted injunction. Where insurers have reserved their rights and the assets of the firm are uncertain, courts can become concerned about whether the cross-undertaking is worth the paper it is written on. It is common for insurers to have to

35 West Wake Price & Co v. Ching [1957] 1 WLR 45 or MDIS v. Swinbank [1999] Lloyd’s Rep IR 516.

fashion bespoke arrangements whereby they agree that they will pay out a certain sum on the cross undertaking.

Summary 38. Of the two routes open to insurers, the subrogated claim coupled with an interim injunction has the advantage of speed. But it is a process with many hurdles. It therefore requires both creativity and planning.

Jamie Smith QC, Helen Evans and Hannah Daly 4 New Square Professional Liability & Regulatory Conference

The speakers assume no responsibility to any party in respect of this presentation. Specific legal advice tailored to specific problems should always be obtained.

4th February 2020

Fraud and all that: claims against professionals who know too much (or choose to turn a blind eye)

Jamie Smith QC Helen Evans Hannah Daly

Overview of talk

• Increase in claimants suing professionals for either knowing too much (or choosing to turn a blind eye);

• In this talk we consider claims against professionals for dishonest assistance and unlawful means conspiracy;

• We then offer some comments as to the insurers’ perspective on such claims- including how to go after the wrongdoer in the short and long term.

Dishonest assistance in a breach of trust Hannah Daly

1 4th February 2020

The elements of the claim

Dishonest assistance gives rise to an equitable personal remedy for compensation. C must show:

• There is a fiduciary relationship (including a trust);

• There is a breach of duty by the fiduciary;

• D has induced or assisted that breach; and

• D did so dishonestly.

What is dishonesty?

Ivey v Genting laid down the prevailing 2 stage test: • First, the court must ascertain the actual state of the individual’s knowledge or belief as to the facts. This is a subjective test. • Once that is established, the second question is whether his conduct was honest or dishonest by the standards of ordinary decent people. There is no requirement that D must recognise that what he/she has done is, by those standards, dishonest.

Group 7 and “blind eye” knowledge

In Group Seven Ltd v Nasir the Court of Appeal set out two conditions that must be satisfied to establish blind-eye knowledge:

• the existence of a firmly grounded suspicion, which is targeted on specific facts that may exist. Untargeted or speculative suspicion is not enough;

• a conscious decision to refrain from taking any step to confirm the existence of those facts.

Whether you know and what you know: the same enquiry?

2 4th February 2020

Causation

The common law limits on causation (remoteness etc) do not apply in claims for dishonest assistance. It is necessary only to show:

• that the conduct in fact assisted the breach of trust; and

• that the loss directly resulted from the breach of trust.

Conclusion

Establishing dishonesty: a difficult hurdle to surmount!

Unlawful means conspiracy

Jamie Smith QC

3 4th February 2020

UMC - the elements of the claim

C must prove that:

• Professional A, Client B and Third Party TP enter into a combination or

agreement or ‘arrangement’;

• for A, B and/or TP to take action which is unlawful (the ‘unlawful means’);

• with the intention (but not necessarily the predominant purpose) of

causing damage to C; and,

• C suffers damage as a result.

UMC - the combination or agreement

UMC – the unlawful means

The test:

• a requirement that the acts/conduct involved are ‘unlawful’; and,

• that the acts/conduct were the means of inflicting the harm on C –

‘instrumentality’.

4 4th February 2020

UMC – menu of unlawful means?

Candidates:

• Crimes

• Breaches of tortious/fiduciary duties owed to C

• Relief under s.238, 239 and 428 of the Insolvency Act 1986

• Breaches of tortious/contractual duties owed to third parties

• Breaches of regulatory codes

UMC - intention

Test: No need for A to have a predominant intention to injure C; an intention to injure should instead be ‘part of A’s thinking’.

Question: Does A have to know whether the means are unlawful?

UMC - conclusion

UMC = a worry for professionals!

5 4th February 2020

Insurers’ perspective

Helen Evans

The conundrum

• When a claim is notified, it is often difficult to know whether the so called

‘wrongdoer’ has in fact been dishonest, or whether the so called ‘innocent

partners’ are as innocent as they seem. Who, if anyone, is entitled to an

indemnity?

• Also, does a claim for UMC connote fraud or dishonesty for policy

purposes?

• Where next?

The options

6 4th February 2020

Reimbursement: The long game

• Some PI policies contain express rights of reimbursement against a dishonest

insured. For example, the SRA’s Minimum Terms and Conditions enable

Participating Insurers to sue for such amount as is just and equitable having

regard to the prejudice caused. Some policies have ‘withholding’ clauses

requiring firms to withhold assets belonging to the wrongdoer and pay them

to insurers.

• Can be useful in the long term, but they are not likely to help insurers if they

need to move fast to protect assets in the hands of the professional in the

short term.

Freezing injunctions: the short term aim

Can be a very useful tool but a number of challenges to think through:

• Type of claim against wrongdoer- can be deceptively difficult;

• Downsides from a defence perspective;

• Impact of reservation of rights.

4 NEW SQUARE LINCOLN’S INN LONDON WC2A 3RJ WWW.4NEWSQUARE.COM T: +44 20 7822 2000 DX: LDE 1041 E: [email protected]