After a COVID-caused dearth of commercial cases, it’s beginning to look like disputes are on the rise. During a pandemic, it makes sense for companies to forego risky litigation in favor of conserving resources. In-house legal departments, however, are already reporting an increase in commercial cases that are only expected to grow.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
After a COVID-caused dearth of commercial cases, it’s beginning to look like disputes are on the rise. During a pandemic, it makes sense for companies to forego risky litigation in favor of conserving resources. In-house legal departments, however, are already reporting an increase in commercial cases that are only expected to grow.
Law 360 details that a rise in commercial litigation will likely also lead to increased use of third-party litigation funding. As the Litigation Finance industry grows in maturity, and more legal firms have positive experiences with funders—applications for legal funding will only increase. Companies would do well to implement claims recovery strategies and vet existing claims to determine which should be pursued.
A recent survey by Ernst & Young shows that 63% of lawyers (external and in-house counsel) reported eschewing litigation during the pandemic. A stunning 81% of respondents said they negotiated contracts to stay out of court, while 1/3 of respondents reported deferring or ignoring a valid legal claim due to a desire to reduce costs. These are situations where litigation funding can be especially helpful.
More than half of companies surveyed say they’re expecting an increase in the volume of claims, while 66% of external legal counsel are in agreement. At least 1/3 of counsel surveyed report already seeing an increase in litigation. Stephen McBrady, partner at Crowell & Moring LLP, explains that the commercial litigation space is already seeing more recovery-oriented action.
It is troubling though, that despite the expected increase in litigation, attorneys are not seeing an uptick in resources. In fact, half of lawyers surveyed by Burford Capital say they expect legal budgets to be reduced. In-house lawyers, therefore, should expect to do more work with fewer resources and greater time constraints. With that in mind, it makes sense to look to litigation funding as a way to continue pursuing litigation without taking away from the operating budget.
