Court closures and the absence of many basic services have brought about a major slowdown in the way cases are settled or litigated. As we don’t know how long COVID-19 isolation and quarantine will last, it’s growing more and more difficult to assess the true cost of the increased time-to-settlement.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Court closures and the absence of many basic services have brought about a major slowdown in the way cases are settled or litigated. As we don’t know how long COVID-19 isolation and quarantine will last, it’s growing more and more difficult to assess the true cost of the increased time-to-settlement.
As Legal Examiner reports, it is vital to look at all relevant factors when determining how or when to develop a settlement. These should include attorney fees, the possibility of a qualified settlement account, litigation funding or pre-settlement funding, possible liens, and taxes as pertains to settlements.
In particular, litigation funding and attorney fees can be the most relevant for clients. Because resolving cases takes more time than usual, the need for litigation funding is greater than ever. While funding rates may seem excessive to some, they’re often needed to mitigate the risks inherent to funding individual cases or class actions. And with time-to-settlement growing, the risk to funders is compounding exponentially. Funders typically want to settle quickly and recoup their investment in as timely a manner as possible, which, thanks to the current COVID-19 crisis, is growing increasingly more difficult.
Another thing to consider is the involvement of third-parties, which is a typical aspect of many cases. This might include private or state-funded medical agencies, bankruptcy trustees, guardians, estate executors, lien holders and more. Medical or other record companies, researchers, and others who are needed to settle or manage cases will be less available as they are needed on COVID-19 related matters.
It’s been suggested that settlements will be fewer and further between in the coming months. As cases are delayed and trials postponed, reaching an agreement between parties grows less likely. With that in mind, the litigation funding industry may need to recalculate its investment parameters given the court delays and additional time-to-settlement.
