Before the rigging scandals started to rock the City, most people would have been wholly unfamiliar with the idea of a 4pm fix or the Libor question.
Then, in 2012, Barclays’ chief executive Bob Diamond sent shockwaves through the financial centre, as he stepped down from his role. Just days before, the bank had been slapped with millions of dollars worth of fines by the US and British authorities for failings relating to Libor, a benchmark rate underpinning trillions of dollars of financial products.
From then on, the fallout from so-called benchmark rigging have continued to rumble through the financial capitals, including prison sentences for some of the bankers caught up in the scandal. More recently, civil cases have been brought in a bid to recoup damages for those who missed out because of improperly set rates.
Although much of the civil action so far has taken place in the US, David Scott, managing partner of Scott+Scott, has recently been assessing the appetite for such claims on this side of the Atlantic, and people are hungry for the money they lost out on before.
For example, in the US, Scott’s firm has secured settlements of over $2bn (£1.53bn) for people who purchased foreign currency and foreign exchange instruments from nine big name banks. Scott’s firm now has somewhere in the region of 30 claimants in Europe, the Middle East, and Asia on board to launch a related claim, while a similar number again are currently in talks with the lawyers to consider their options.
“Clearly there’s an opportunity for a European victim to recoup some of their losses,” Scott noted, although he added not every eligible claimant will make it into the courtroom because “there may be a situation where either there’s not enough money or they don’t have an appetite to do it but it’s about providing people with information … so that they can make an informed decision about the next steps”. The firm should be ready to launch action in the next few months.
Although Scott is best known for his work on benchmark cases, his firm has also recently been retained to work on claims coming from the so-called Truck cartel case, after a group of truck producers were fined €2.93bn (£2.54bn) for their participation in cartel lasting 14 years.
As many of the cases Scott works on are triggered by clients demanding what’s theirs after the regulators successfully crack down, the historic and long-running nature of the cases present their own problems.
“Memories fade, documents get lost, people die and that becomes the real challenge in these cases,” Scott said.
Although the numbers involved are enough to make even some of the City’s biggest players blush, with the European Commission alone dishing out billions in fines for the types of competition infringements the work stems from, Scott thinks it’s highly unlikely he’ll be the man who brings the banks to their knees.
“You hear that but I’ve been involved in some really big cases and I’ve never feared that we’re going to bring down the banks or the whole financial system,” he smiled.
Scott comes from a family of lawyers – his siblings, spouse and in-laws are all part of the profession – and Scott+Scott was founded by his father who, now approaching his nineties, still practises law in Connecticut.
Although, as he hails from the US, Scott has unique insight into how legal eagles work in both the UK and the US, he notes that there isn’t much technical difference between professionals in either jurisdictions and rebuffs the stereotype that Americans are more litigious than their European counterparts.
“I think that US lawyers’ reputation precedes them. It’s not always a great reputation and, to my mind, not well-deserved,” Scott said.
Scott’s background has also given him a unique oversight of June’s Brexit decision. Although he has his concerns about what Brexit might mean for the firm’s London venture, the vote encouraged clients to get a move on.
“Clients who may have been moving a little slowly are a bit more, eager may be an overstatement, maybe quicker to return a phone call and quicker to get you those documents,” he said.
For the time being, business is booming for the firm’s London offering, with plans to hire more lawyers in the works. Scott believes he and his colleagues offer something the local competitors don’t, marrying a claimant-focused no-win-no-fee style with the professionalism one would expect from the magic circle.
Scott said: “I sound a little Trump and grandiose by saying we made our mark, but we clearly now have a legitimate presence in the UK and on the European continent.”