The International Who’s Who of Aviation Lawyers has brought together four of the world’s leading practitioners to discuss alternative financing methods, shifts in dispute work, changing regulation and increased competition within the aviation marketplace.
Conyers Dill & Pearman
British Virgin Islands
A number of the lawyers we spoke to during our research noted that traditional aircraft financing was scarce in the current economic climate. Is this true in your jurisdiction? What alternative financing methods are gaining popularity and how is this affecting clients’ requirements of counsel?
Sean Gates: Business aviation is holding up well for us, as is financing work from the parts of the world that are still growing!
Audrey Robertson: In the BVI we have seen a significant upturn in aircraft finance in the past 18 months. BVI special purpose vehicles (SPVs) are increasingly used in financing structures either as borrower, lessor or obligor. The BVI is a popular offshore jurisdiction for Latin America.
Lawyers focusing on contentious aviation work noted a reduction in their workflow in the past year. To what extent is this true of your practice or the practices of your colleagues? What reasons could you give for this change?
Sean Gates: There seems to be a downturn in the number of events that give rise to this work across the board; verified for example by the insurers and brokers. Could it be a new paradigm or a blip? However, attritional work is increasing thanks to the assiduous efforts of the EC to nanny the consumer and assert their people-friendly attitude!
Audrey Robertson: We see very few aircraft disputes work in the BVI except for the occasional enforcement over a charge of the shares of the owner of the aircraft. We anticipate we will see more private aircraft being registered in the BVI (the register is currently in its infancy) following the proclamation into force of the Mortgaging of Aircraft and Engines Act, 2010, which may in turn lead to more disputes work.
Aileen Camacho: Aviation incidents that may give rise to a claim happen daily, but the plaintiff’s needs are ever changing. In today’s financial climate, the business hardships being faced by many and the family’s daily demands seems to have served to reduce the potential plaintiff’s will to judicially challenge the aviation “wrongdoer”. The potential plaintiff is more wanting to find a solution quickly rather than to fight with the hope of achieving a greater payment years later.
Lawyers around the world noted increases in regulations surrounding passenger protection in the past year. What is the current situation in your jurisdiction? To what extent has your practice been affected?
Sean Gates: EC regulations are like London buses so there is a continuing flow of work here advising clients on the regulations and the whimsical approach of the ECJ to them.
Jiri Hornik: The strengthening of passenger rights has created an industry in itself. New businesses focusing on consolidating passenger claims and enforcing them against the airlines have gained significant negotiation power in comparison to individual passengers. This has made the airlines think about finding an effective defence and getting outside counsel more involved in passenger claims disputes. This involvement is likely to increase hand in hand with the need to create efficient passenger claims policies.
CHANGE AT THE TOP?
Our respondents noted an increased diversity in the aviation legal marketplace in recent year, with a greater number of smaller firms and junior lawyers claiming more and more market share. Is this true where you are? Is there a particular law firm model – boutique, full service – that is well suited to the current marketplace? If so, why?
Jiri Hornik: The unique character of aviation and its highly specialised and complex regulations have for a long time played well for lawyers deeply educated in aviation law, and clients hunted for very well-known and well-paid names. With clients becoming more cost-sensitive, room has been made for those who have left their gurus. I do not believe there is one particular law firm model that is more suitable than another for advising in aviation. It is still more about a personal relationship with the client and one’s own expertise, though the costs these days have much to say, too.
Aileen Camacho: The current economic reality has compelled many law firms to reassess their business models moving forward, and to succeed flexibility is a necessity. An attorney’s experience and the long-standing personal relationship between the attorney and client may be valued, particularly in the handling of certain types of issues, but current economic challenges are pressuring clients to think out of the box, exploring options that open opportunities to the less experienced. In time, failing to identify and understand the clients’ personal and business needs beyond the actual claim or legal issues, or to recognise the potential competitor may prove to be costly to the law firm business.