SURVEY: warning over absence of protection against the 'long arm of American justice'


More than two-thirds of top-30 UK law firms risk being caught by the 'long arm of American justice' because they have chosen not to implement additional risk control measures, a survey seen exclusively by the Gazette revealed this week.



Legal Risk's annual Top 100 survey asked firms if they had put in place additional risk controls to minimise the possibility of being caught up in litigation involving clients based in or substantially controlled in the US.



Of the top-30 firms, only 14% implemented additional controls for American clients, while 68% did not and 18% said this was not applicable. Of all firms quizzed, just 9% had extra risk management procedures in place in relation to US litigation, 48% did not and 43% said it was not applicable. Sixty-four firms, including 22 of the top 30, participated in the survey.



Frank Mayer, partner at Liverpool-based Legal Risk, said some firms may be satisfied with existing risk controls but questioned 'whether larger firms with corporate clients who may have US investment can safely assume the risk is in fact "not applicable" when the tentacles of globalisation are reaching ever more parts of commercial life'.



'The thing that concerns us is the long arm of American justice,' he said. 'It is relatively early days and I am not saying that a lot of UK law firms are being sued in the States... but firms need to be aware that their clients may be caught up in things and if they have advised on aspects of transactions, they might be called in.'



Andrew Blair, partner at City firm Barlow Lyde & Gilbert (BLG), said that most top-100 firms would already have good risk management controls in place.



The survey also revealed that professional indemnity insurer St Paul Travelers, recently rebranded Travelers, retained its market leader position with the top-30 firms for the fifth year running.



QBE held second place for a second year. Almost 10% of firms had changed insurer, the highest proportion since 2004.



Almost 15% of firms changed broker, and of those that did so, more than half cited service as the reason. Marsh maintained its lead position with 36%, while Aon moved into second place. Lockton slipped back to third position with 14%.



This year was the first in which all respondents said they limited their liability contractually at least some of the time. Almost half did so routinely, with limitation clauses becoming increasingly sophisticated.



Anita Rice