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English court activity rebounded strongly in May after falling sharply in March when the government first imposed lockdown measures to tackle the coronavirus pandemic, according to research from international law firm HFW and litigation analysts Solomonic.
At least 70 new claims were filed with London's commercial and Chancery courts in each of the last three weeks of May, compared to under 30 new claims a week in March — 56% lower than March 2019, Solomonic data show.
May’s activity was higher than the same periods in 2019 and 2018, where average weekly filings were 61 and 63 respectively.
Damian Honey, dispute resolution partner at HFW, said: “Events of severe market shock are always followed by a lull in disputes activity, as businesses are focused on survival—not entering into potentially expensive litigation. We saw that with the global financial crisis in 2008 and we've seen it again with Covid-19.”
Honey said May’s uptick in claims suggests businesses are starting to look ahead more confidently and considering issuing proceedings, particularly in relation to contractual issues that have arisen due to the pandemic.
He added: “The high levels of market uncertainty mean that disputes activity could remain patchy over the coming months, but we ultimately expect the market consequences of Covid-19 to result in a surge of litigation and arbitration.”
The firm reckons that surge could also be driven by an increased use of litigation funding.
Adam Strong, chair of HFW’s litigation funding committee, said: “Businesses are understandably very focused on cash flow, costs and risk at the moment, so the ability to use third-party funding to not only de-risk litigation but also to completely remove legal fees from their balance sheets is extremely attractive. We're already seeing a lot of interest from clients in litigation finance and we expect that continue.”
Back in March, litigation funder LCM announced the first close of a $150m disputes finance fund amid growing investor interest in the asset class.
However, last month the Australian government said litigation funders would be subject to stricter new regulatory requirements amid concerns that the industry is growing too fast and leading to poor justice outcomes.
Meanwhile, research by Lex Machina found that case filings with US Federal District Courts, excluding product liability cases, fell 16% during March and the first half of April.