The rise in litigation owing to the COVID-19 pandemic cannot be overstated. A spike in claims relating to the virus, as well as renewed interest from litigation funders has led to widespread changes in the legal and business world. This trend follows a previous drop in litigation as courts scrambled to adapt to remote work, Zoom meetings, and other COVOD-related factors.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
The rise in litigation owing to the COVID-19 pandemic cannot be overstated. A spike in claims relating to the virus, as well as renewed interest from litigation funders has led to widespread changes in the legal and business world. This trend follows a previous drop in litigation as courts scrambled to adapt to remote work, Zoom meetings, and other COVOD-related factors.
The Lawyer details that the trends seen in the industry today are similar to those of the 2008 financial crisis. Specifically, a rise in claims spurred by financial urgency. Cash poor businesses can use third-party funding to take cases off of balance sheets. Yet businesses are also wary of legal funding because it arms class action suits that can cost time and money.
Sean Upson, a partner at Stewarts, explains that budget planning has taken center stage at many companies—which to some means forgoing litigation regardless of its merits. But Upson suggests making litigation part of a company’s profit plan. Virtual trials can be less time-consuming in terms of staff hours and require no travel.
Some companies are reticent to utilize litigation funding. This is not, as one might think, related to a lack of control over the litigation. In fact, funders are not permitted to make decisions regarding litigation or potential settlements. Likely this is due to administrative requirements regarding disclosure and cooperation, PR, and other burdensome regulatory requirements.
Litigation funding is merely one of many tools that in-house legal teams can use to balance budgets—but it’s a solid option that all companies should consider.
