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Case study: Commercial Litigation

case-study-commercial-litigation

Commercial Litigation: Termination Settlement

Deal overview

Settlement of a Service Agreement termination
High value : >£10 million
High stakes : urgent and confidential

The deal was for a termination settlement agreement, in respect of a Service Agreement, where the defendant agreed to pay a settlement amount of over £10m into escrow, for the counterparty to draw down from as certain conditions are met.

THE CHALLENGE

Rapid turnaround for escrow payments

As is often the situation, the settlement was highly confidential and urgent, requiring a streamlined, secure and fast escrow and payment mechanism to disburse funds. The law firm reached out to Shieldpay to seek out an escrow solution that could support with their accelerated timelines. Unlike traditional escrow providers which have time-consuming set-up processes and are often expensive to facilitate, Shieldpay’s technology-led solution is agile to meet any scope of deal requirements and at pace.
THE SOLUTION

Leveraging automated, digital escrow

Holding client funds for long periods isn’t core to a law firm’s offering, potentially conflicting with Rule 3.3 of the SRA Account Rules, which is a driver for engaging escrow solutions. Where escrow really comes into its own is when there are milestone or conditions for release, and any number of tranche payments to facilitate. Shieldpay was identified as the optimal escrow solution to support the safeguarding and release payments for this settlement.

  1. Contracting: When there are time pressures to process the transaction, getting stuck in endless drafting and red lining of contracts is not a good use of time. Shieldpay’s streamlined and simplified contracts have been designed with lawyers to ensure that the signing of an agreement with Shieldpay is efficient.
  2. Verify: Streamlined Due Diligence: Another aspect that can elongate timelines is manual verification of parties to the transaction. Shieldpay is building a market-leading verification ecosystem that brings together industry leading tools and practices, with pre-built frameworks and logic to curate verification journeys to suit any transaction. Using automation and digital KYC, including bank details collection, Shieldpay removed the administration and risk from the law firm in completing due diligence on all of the parties to the transaction.
  3. Hold: Safeguarding: Shieldpay leverages a Tier 1 and BoE banking infrastructure to deliver robust safeguarding of funds, green-rated by external auditors for the last 3 years. For a significant sized transaction, knowing that Shieldpay has a fully segregated escrow solution gave both parties to the settlement, and the law firm the trust they required that funds were protected.
  4. Hold: Conditional Payments: The ability to release payments from the escrow at different points, dependent on certain conditions being met, was also critical to this settlement. Whilst there were only two parties to the transaction, knowing that they could have unlimited disbursements as required by the terms of the settlement was a key requirement.
  5. Disburse: Prompt Payout: Shieldpay's automated Disburse capability ensured that once a release notice was provided for a draw-down, funds were disbursed within 24 hours, on the law firm’s instruction.
THE OUTCOME

A simple and effective facilitation of the settlement agreement

With Shieldpay’s platform, the law firm was able to quickly and effectively set up the escrow to facilitate the settlement, and easily manage the ongoing draw-down of payments when key conditions had been met. This also enabled the firm's lawyers to focus more on billable work and remove the burden and limitations of relying on internal cash management via the firm’s Client Money Account.

Shieldpay’s expertise in digital escrow and conditional release payments simplified the facilitation of this settlement agreement, ensuring that claimants were fully satisfied by both the outcome of the litigation, and in receiving their damages in the most expedient way.

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