press release
Expert witness 'drought' to hit lenders in 2008
6 December 2007
Professional liability specialists at law firm Browne Jacobson
are predicting a shortage of credible expert witnesses to defend
against the raft of claims expected next year as the credit squeeze
continues to affect financial and property markets in the UK.
Nik Carle, partner at the firm’s Nottingham
office said:
“It looks increasingly likely that 2008
will mark a renewed period of recrimination and claims-making in
the secured lending sector – and this will demand the use of
experts to advise courts and litigants on the prudence, or
otherwise, of past lending criteria.
“Come January, those post-party blues will
be biting harder than they have for many years. The Council
of Mortgage Lenders will have published its latest figures on
repossessions by then and the outlook is bleak, to say the
least.”
Browne Jacobson is predicting that lending
practice advisers will be particularly sought after in the New
Year, as the pool of available expertise in that discipline is
quite small.
According to the firm, it will be the
sub-prime and impaired credit markets that will yield the greatest
number of claims over the next 12 months. As more and more
borrowers default on these loans, so the pressures will mount on
lenders to maximise recoveries against their security.
Those recovery actions, whether they take the
form of professional negligence or other claims, are bound to
require some ‘opening up’ of lenders’ internal procedures for
challenge.
Carle continues:
“One of the key features surrounding the
next claims phase is the newness of the type of lending we have
seen in recent years. Once that ‘opening up’ process begins,
it will become apparent that there is no real guide available for
what amounts to appropriate sub-prime lending practice and what
does not.
“In the 1990s, when we had the last flood
of lender litigation, nobody was lending in quite the same ‘easy’
manner and accordingly, there is not much of a directly comparable
track record to work from today.
“This is where the demand for good lending
practice experts really comes in. They have a golden
opportunity to help shape the law in this new era. Lawyers,
judges, arbitrators, ombudsmen and mediators are all going to be
looking to experts for a steer on whether particular cases fall
above or below the line of acceptability.”
He also advises lenders to use an expert as a
‘private adviser’ in the first instance, for an early ‘warts and
all’ view about the merits of a case. The adviser will still
be acting independently, of course, but will owe his or her primary
duties to the lender, not the court. It is always possible
for an organisation’s status to be converted to a full expert
witness role later on, under Part 35 of the Civil Procedure
Rules.
With so many lending transactions predicted to
falter, well-positioned experts could be in for a busy and
lucrative time over the next year, concludes Carle. Lenders
need to be acting now to ensure they are taking informed advice
early and forging links with experts who can actively support them
through the inevitable challenges of 2008 and beyond.
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