Litigation Funding

The number of new claims filed in the English courts has slumped by 65% in the past month following the COVID-19 outbreak, according to new data from HFW and litigation analytics company Solomonic.

Just 29 claims were filed last week, which was 56% lower than the corresponding week last year.

However, lawyers at HFW expect an influx of litigation and arbitration claims once the coronavirus situation settles.

"Whenever there is an event that causes severe market stress, there is always a lull in disputes activity before the claims start coming through, as everyone's immediate priority is taking stock of the situation — particularly in relation to contractual positions — and managing cash flow," said HFW dispute resolution partner Damien Honey in a statement. "When you're in survival mode, you don't typically go around commencing what could be expensive litigation.

"We saw the exact same thing happen with the financial crisis in 2008 – the disputes market went really quiet, but that eventually gave way to a surge of litigation and arbitration. We expect the same to happen with COVID-19."

The firm also predicts an uptick in litigation funding as a result of the pandemic that Adam Strong, chair of the HFW litigation funding committee, said would attract a lot more attention now than it did during the 2008 financial crisis.

"Litigation funding was a fledgling industry in 2008, but it's now very much in the mainstream — that could have a huge impact. Having access to third-party funding allows claimants to not only de-risk litigation, but also to completely remove the legal fees from their balance sheets.

"That will prove extremely attractive to many companies at the moment, and could mean that we start seeing COVID-19-related claims coming through sooner than they might otherwise."