Survival through partnership

Survival through partnership

Steve Henley, of Claims and Recoveries Service Ltd, examines the case for solicitor/recovery agent partnerships.

THE pursuit of carriers' liability has been an issue since the movement of cargo began. Early pioneers were responsible for shaping the rules and laws, which still govern the carriage of goods today. Whatever the merits of the Hague, Hague-Visby, and Hamburg rules are, when dealing with the movement of goods by sea, carriers' liability continues to baffle and worry cargo underwriters.

Underwriters face a constant barrage from recovery agents and solicitors promising high percentage returns at low prices. Despite this, underwriting statistics continue to show poor loss ratios.

Things were a lot simpler a few years ago. A good recovery agent was frequently given first stab at a pursuit, as there was no charge even if it failed. The drawback was that valuable time could be lost.

The greatest frustration to the recovery agent is the appointment of a solicitor when the claim is considered to be high. There is no disputing that a claim needs to be properly protected, but decent recovery agents will make that their number one priority. After all, once the security has been obtained, the larger the claim the greater the bargaining power.

Solicitors are able to offer a contingency service, even if the laws were not fashioned with maritime business in mind. But there has been no rush of activity to date by solicitors to take advantage of this. It could be argued that any subsequent action would result in all costs being backdated, making underwriters prefer to stay with the recovery agent, where their costs are nil. It could also be argued that solicitors are wary of attracting a great deal of unprofitable business. Underwriters also realise that relationships with carriers and P&I clubs are better when forged by recovery agents, rather than by the threat of legal action from the solicitor.

Whatever the reason, not a lot seems to have changed. There are obvious dangers in appointing recovery agents without a proven track record. Recoveries is not a subject to dabble in. Many have tried, and many will no doubt continue to advertise themselves as experts in their field. Any underwriters not up to date with changing legislation and conditions could be in real danger of leaving themselves unprotected.

Unless cargo underwriters or claims managers are also experts in the laws covering the carriage of goods by sea, they could blindly accept the recovery agent's report stating, 'No recovery was possible'. There are countless reasons why a recovery may not be achieved, and many of these may be the fault of the recovery agent or the solicitor. This can only be uncovered by requesting copies of documentation and asking why a recovery was not possible - was it a question of poor documentation, or had the wrong party been pursued?

It is time for change. Everyone has to become more professional. Recoveries is not a layman's activity. It requires a good negotiator, and some of the best negotiators are to be found in recovery firms. It also needs the firm footing and knowledge to be found within law firms.

While solicitors recognise and accept the negotiating skills possessed by a number of recovery companies, recovery firms have to accept that, for the sake of continuity and costs, in-house solicitors are the way forward. There is little point in a recovery agent negotiating a case for two years, only to pass the whole file to solicitors, who then require hours of updating on the current position before they can even begin.

So, are recovery agents a thing of the past? Under the present format, yes. Too many agents have become fat without having to become knowledgeable. Those days are gone, or are at least going, and the dawn of the solicitor/recovery agent team is upon us.