Asset Recovery 2015: Trends

For this fourth edition, and with the benefit of years of research and thousands of votes from clients and private practitioners, Who’s Who Legal takes a closer look at developing trends in the global asset recovery market.

According to our sources the variety of litigation in this sphere has expanded in the past 12 months as the caseload coming from recovery under fund and investment vehicles stemming from the global financial crisis continues to diminish. With the types of frauds now occurring calling for more creative litigation strategies, this has spawned greater interest in the field, and therefore competition among firms who are now contending with a number of new entrants, attracted by the thought of asset recovery being “one to watch”. However, the complexity of the field, along with the established set of firms already in the market, means that success is not assured for these new contenders.

Offshore Market

The buoyant offshore market continues to grow steadily, with both Channel Islands and Cayman/BVI firms reporting a busy year. Given their history, the bulk of work coming through to these jurisdictions has not changed in recent times, with insolvency and trust-related fraud cases remaining at the top of the table. The legal markets themselves have remained stable, although lateral movement between firms has increased in the Cayman Islands recently. However, despite the “business as usual” conclusion given by our offshore nominees, there are many areas that practitioners aim to keep an eye on. Tax-related asset tracing is cited by several offshore lawyers as growing in popularity – no surprise, given the fervour with which tax authorities across the globe are clamping down on tax evasion and looking for assets offshore. Given that tax is an area in which offshore firms tend to excel, our sources welcome this turn of events and report that they are well prepared to advise both clients on the receiving end, as well as those instigating procedures.

In the BVI, sources note that lists in the recently created commercial court are getting crowded, as more cases are being brought. Cost-sensitivity has also had an impact as BVI-based lawyers report a shift in instructions with clients now choosing to come direct as opposed to going through London lawyers, as was typical in the past. Sources also noted an increase in direct access work from in-house counsel, particularly on the CIS front, as well as changes to the regulations relating to the provision of legal services. Together, these factors are having a major impact on the London market, as fewer lawyers are able to cut their teeth in the BVI. In particular the junior end of the UK Bar is likely to suffer the most, as the strict limitations implemented by the Legal Profession Act 2015 curtail their ability to gain offshore experience. That said, with the BVI maturing as a jurisdiction, local lawyers anticipate that the “balanced diet” they’re used to will continue to flow; they remain optimistic about the years ahead. This opinion appears to be shared across the board, and so a number of offshore firms are continuing on their strategy of steady growth over the next few years.

Internationalisation of Asset Recovery

The “ever-increasing international focus of asset recovery cases has been evident for a number of years” according to one of our sources, and this sentiment is affirmed across the world. NGOs and governments are continuously joining the fight against corruption and working across borders to bring cases both in the civil and criminal spheres. With a growing awareness of the interplay between international criminals and their civil liabilities, practitioners are taking the lead in implementing and running programmes for states and multinational corporations, as well as encouraging other jurisdictions to co-operate or take action. To that end, the lawyers themselves have also had to adapt their practices in order to meet the growing international demands of an asset recovery specialisation – working much more seamlessly with their counterparts in key jurisdictions around the globe. International harmonisation of recovery practices is likely to follow, and steps have already been taken in some regions to expedite this development.

The new European Account Preservation Order is likely to have an impact on those countries who are signatories (although both the UK and Denmark have opted out). Entered into force in July 2014, the reformed system is aimed at facilitating cross-border debt recovery in civil and commercial matters. Under this new procedure, creditors can obtain an order which freezes a debtor’s funds in an EU bank account up to a specified amount. Despite certain safeguards being put in place, a number of our sources reported concern that there is a risk of the procedure being abused and used as a “nefarious litigation tactic”. However, with the main provisions not coming into place until January 2017, it remains to be seen what impact this will have across the member states.

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