The Gazette published an article on 26 January headed 'Names reject Lloyd's offer'.

They have not rejected it yet: the offer is open for acceptance until 14 February and although a number of Names' action groups have advised their members to refuse the offer and to pursue litigation, it is open to the individual members to return their forms of assent in favour of the offer.

If they do, they will be supporting a rational plan to solve some very difficult problems.This is an important, controversial live issue on which many solicitors have to advise their clients.

I am glad to have the opportunity to put forward the other side of the story.The problem Lloyd's faced was to try to settle claims against Lloyd's agents relating to 31 syndicate groups and over 100 syndicate years.

These claims involved over 21,000 Names.

The claimants are competing for the assets of the agents, which largely consist of errors and omissions insurance and which are insufficient to meet the claims in full.

Lloyd's approached the problem by establishing two panels: a legal panel, chaired by Sir Michael Kerr, which advised on the strength of Names' claims and a financial panel, chaired by Sir Jeremy Morse, which was given the task of investigating the financial resources available and recommending the structure of the settlement offer.

The offer was formulated by Lloyd's on the basis of the reports of these panels.

The procedure was confidential and without prejudice to the parties' rights, as is the offer.

The offer takes the assets available and divides them between the parties in accordance with the legal panel's assessments, as adjusted.The adjustments take account of such things as proximity to court and an uplift for those in active pursuit of claims.

There is also an increase for Names with multiple exposure to LMX and stop loss syndicates.The central point is that Lloyd's believes that the settlement proposals are the best and most fair offer that it can make in the interests of those involved in the disputes and of the society as a whole.

It is possible that some Names will do better through litigation and those who are well advanced may believe that they gain if the offer fails.

By being the first to obtain judgment these litigants may hope to take the assets of the defendants to the detriment or the exclusion of those who are less well advanced in their claims, and even to the exclusion of Names on the same syndicate who have not joined in the litigation.Whether or not they are right in this remains to be seen.

We believe that the outcome is uncertain.

For example, it is possible that before one well advanced group obtains an enforceable judgment, others, although less well advanced, may crystallise their claims by settling their actions.These are issues for Names to weigh up and on which they will take advice.

It is clear that the distribution of the available assets through the offer, based as it is on recommendations of the legal and financial panels, represents an attempt to achieve an orderly settlement involving all Names' claims, allowing each Name a fair share of the available resources.

Although litigation may produce a solution which is more favourable to some Names, the outcome is uncertain for all.Given that litigation in the Gooda Walker action will start on 26 April, and that other cases are already before the court, to criticise the offer for being 'put together in haste' is absurd.

Those involved worked as hard as they could to achieve a settlement offer which could allow a fair distribution of the available funds before any action group got so far down the road to trial that settlement on this basis became impossible.

Lloyd's is to be praised for its speed rather than criticised for its haste.The article, 'Names reject Lloyd's offer', also criticises the offer because of its 'take it or leave it' nature.

Negotiation with 21,000 people is not a practicable proposition.

In formulating the offer, Lloyd's has done its best to divide the available funds in the fairest way that it can.Some Names complain that substantial deductions will be made from the credit available under the offer before it is paid over.

It is true that the offer requires members to settle their debts to Lloyd's before receiving any remaining cash.

Litigation, on the other hand, is thought by some to offer direct payment to members.

However, even if litigation should eventually prove to be successful, Lloyd's will be vigorous in seeking to recover from the members the amounts needed to meet their underwriting obligations.

Lloyd's believes that debts must be settled and policy holders must be paid.Should the Names accept? They must decide individually, and one factor in their decision will be whether or not they believe they will do better through litigation.

Support for the offer is support for a rational plan to achieve a solution to problems which will otherwise be solved (or left unsolved) by a rush to judgment.