It is a cautionary tale for insurers and regulators alike ? how not to do business in the complex world of insurance.

The Sphere Drake Insurance and Odyssey Re against Euro International and the London office of Stirling Cooke Brown has gone down in the annals of insurance litigation.

It took years to be settled and as it made its tortuous way through the courts it revealed serious flaws in the way business was done in London, and according to a top lawyer from Bermuda working in London, can help Bermuda companies avoid the same pitfalls.

"It really is a cautionary tale for the insurance industry," said Mark Chudleigh, partner at the London office of Sedgwick, Detert, Moran and Arnold.

"I think there are lessons to be learned by both the insurance industry and the regulators."

Mr. Chudleigh was speaking after he gave a lecture on the case called "Spirals, Lies and Reinsurance" at an afternoon seminar organised by the law firm Sedgwick at the Bermuda Underwater Exploration Institute.

He had organised the event to raise the profile of Sedgwick in Bermuda, and it had originally been planned for September, but was postponed due to Hurricane Fabian.

It was re-scheduled for this week and about 50 insurance executives, lawyers and underwriters attended the afternoon seminar called 'Hot Topics for the Bermuda Insurance Market'.

The talks ranged from tort reform in Texas to a discussion on terrorism insurance and an analysis of how Enron actually happened.

Directors and Officers insurance, a session on class action abuse and a lecture on HIPAA privacy rule rounded off the afternoon.

Mr. Chudleigh was the last speaker of the afternoon with an examination of the Sphere Drake against Stirling Cooke decision.

He said that the case started life as a 'RICO' ? a racketeering and corruption trial in the courts in New York, where it was dismissed, and then moved to London.

After a long and protracted case, Sphere Drake won, but in the 1,600 page judgement ? believed to be the longest in English legal history ? was also damning about Sphere Drake.

"Although Sphere Drake won, this case it was in spite of poor management," said Mr. Chudleigh.

Justice Thomas said in his July 2003 ruling that management had signed documents without reading them, "had paid little attention to the bordereaux (details) supplied and had been prepared to make decisions in wine bars and pubs with no proper notes or documentation being produced to record such decisions as may have been made on such occasions."

Management had also "paid no proper attention to the internal controls in place and had failed to conduct any inspections or audit."

And it said that the person writing the business's conduct had "fallen well bellow that which was to be expected of any competent underwriter" and cited "gross negligence" and "dereliction of duty" that stopped an investigation happening earlier into Euro International and Stirling Cooke Brown.

Mr. Chudleigh said that during the trial, it was the talk of the industry with many salacious details coming out about the case which had made the trial hot gossip at the time.

"Bermuda management is much more professional than that," said Mr. Chudleigh. "The judge was very critical of the culture at Lloyds and the way it worked in this particular market. And there are lessons to be learned by the Bermuda regulators in terms of retaining Bermuda's good reputation."

Mr. Chudleigh hopes to make the Sedwick Hot Topics seminar an annual event and wants to organise a second seminar for next September.