Negligence trust disputes and insolvency were top of the agenda at last month's Trust & Estates Litigation Forum as the impact of the financial turmoil becomes apparent. Charlotte Edmond reports

It is not often that a room full of litigators are likened to meek lambs. But Shan Warnock-Smith QC's description of how senior private client and family lawyers last year underestimated the impact of the financial turmoil was met with nods of agreement at this year's Trust and Estates Litigation Forum.

As chair of the conference, Warnock-Smith described how the turn in the economy had had an unprecedented impact on trust and estates law, with negligence claims against advisers, trust disputes and insolvency all set to increase over the coming months.

One of the key areas of discussion – both formally and informally – at the conference was the expected upturn in trust collapse and insolvency.

Speaking at the conference, this year held at the Four Seasons resort at Terre Blanche, Provence, Carey Olsen pensions and trust partner Paul Buckle said: "It was not until comparatively recently that the idea of an insolvent trust was comparatively rare – with the possible exception of things such as certain types of pensions schemes and other trusts which may have been established to meet certain fixed liabilities."

Contrasting the laws in England with those of Guernsey and Jersey, Buckle raised several questions:

• "If the trustee is asked for a distribution from beneficiaries and is aware that it has substantial indebtedness, which point can it take account of that in deciding whether or not to distribute?
• What is the position if there is more than one creditor and the fund becomes insolvent? Priorities between creditors in an insolvent fund is something the law in all these jurisdictions is totally silent on.
• Should beneficiaries become personally liable to the creditor if they receive a distribution from the trustee, where the trustee knew of the creditor's potential claim on the trust assets?"

Private client director at RBC Wealth Management Joe Donohoe, Baker & McKenzie litigation partner Anthony Poulton and Herbert Smith head of private wealth and charities Rupert Ticehurst highlighted a number of key areas as potential downturn-propelled litigation hotspots for trust and estates lawyers. These included being aware of introducing unintended consequences in documentation – lawyers should make sure that there is clarity on tax jurisdictions and ensure that it is clear who the trustee is, for example.

But with a number of factors feeding into an increased likelihood of litigation, how to avoid adverse press coverage was also a topic that caused a lot of interest. Schillings defamation and privacy specialist Rod Christie-Miller offered some advice to concerned lawyers, particularly in light of a recent ruling allowing any third party to get hold of court judgments.

Christie-Miller believes the courts are willing to take a flexible approach, based on the merits of the particular circumstances, to prevent publication, or prevent public access to certain documents. For example, it is possible to create a redacted version of the case, available for the public, and another, sealed version, which is unavailable to the public.

With regards to hearings, it is possible to make applications for individuals to remain anonymous, if there is confidential information (which can be commercial, proprietary, or personal privacy) or on the basis that it is 'necessary in the interests of justice'.

Christie-Miller added: "What will be relevant for litigation in the future will be to push the media towards the reportage defence, so that they get into reportage mode and just put both sides of the story."

But while this is clearly sage advice, it was not immediately apparent whether this reminder of quite how much the downturn will put trust and estates lawyers in the limelight over the coming months was a welcome one.

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Shan Warnock-Smith's hot topics for 2009

• "Breach of trust claims/professional negligence claims against advisers in the investment arena. We are bound to see a welter of these claims – at least at the stage where loses start to crystallise. We are at the stage of uncertainty where the dust has not yet settled enough to make these claims a contemporary reality in quite the number we are going to get in due course – but they have started.
• Proprietary estoppel. So far as attacking estate plans for us as trust litigators, we sometimes forget about proprietary estoppel, and estoppels generally, as a way in.
• Insolvency and trusts. We are all going to have to grapple with insolvency law fairly frequently. I think we are all used to insolvent estates but insolvent trusts is perhaps a new and novel animal we are going to have to cope with.
• Careful structuring of trusts, where there are interlocking roles – settlor, protector, trustee, investment manager – how you put those levels of activity together into something that actually works. Inevitably the people putting the trust together, the people selling the trusts, are trying to do it sometimes on a budget and don't necessarily produce the best piece of work. That all gives us opportunity as litigators to attack, but really, wearing my adviser's hat, I can't help feeling we should all get better at tackling that at the planning stage.
• Multi-jurisdictional succession disputes. We are all going to have to start trying to grapple with European rules. I think we can all cope with multi-jurisdictional disputes in the offshore world and the UK, but the minute you get Europe involved we all get slightly caught in the headlights.
• Court of Protection disputes. There is a lot of Court of Protection work going on at the moment – it's no mystery why that is on the increase with an aging population, but we are getting some very, very interesting decisions in the Court of Protection. You are simply looking at the best interests and all the other aspects that are identified in our Mental Incapacity Act – how that's going to play in other jurisdictions that don't have that legislation, but do nevertheless have a statutory jurisdiction to settle assets for example, or make statutory wills, will be interesting to see. That is a huge sea-change and we are going to see a lot more of that kind of work."