The cost of City lawyers, “endemic” delays in the courts and the impact of adverse costs mean London has cause to worry about its global pre-eminence as a legal centre, the boss of Burford Capital has warned.
Christopher Bogart, chief executive of the world’s largest litigation funder, said some work was already migrating to Singapore as it has established itself as a good venue for arbitration.
Speaking as part of an interview series organised by City law firm HFW, Mr Bogart identified “two or three big concerns that London has to watch very carefully” if it wanted to sustain its position as the global legal market became more competitive.
“One is the sheer cost of legal services there,” he said. “The second is delays that are becoming endemic in the English courts. And the third is the impact of adverse costs, which are increasingly deployed as a tactical weapon in arbitration and High Court litigation.
“Offsetting that is the quality of the judges, but those economic factors are a real danger sign and there needs to be a greater perception that those things are a threat to the continued growth of London.”
Pointing to how many London barristers were “regularly” working in Singapore, he said that was one of the jurisdictions where the work could go instead.
He highlighted Singapore’s success in establishing itself as an arbitration centre, as part of what he said was an “ongoing, steady move towards arbitration” generally.
Mr Bogart explained: “It’s not as efficient and inexpensive as billed, but every time a company finds itself mired in a decade-long piece of litigation, with multiple levels of appeal and lots of frolics and detours, that’s a company likely to think hard about arbitration the next time. I certainly see the shift to arbitration as a continuing trend.”
This has the potential to change the pecking order for global disputes centres, he went on.
“When you get a pro-arbitration court system that is able to address disputes over arbitration quickly, that gives that jurisdiction a significant leg up.
“Combine that with good infrastructure and it being favourable to pursue your cases there, and that has been a successful strategy for Singapore. When you get into that position, there is a good deal of market power because it takes a long time to write a new arbitration venue into contracts.”
Mr Bogart predicted incremental, rather than radical, change in how disputes were conducted.
“What will force some of that is just cost. Burford has been around for 11 years, so we have a broad history in case types.
“Looking at how much it costs to litigate the same type of case, you’ve seen cost inflation over those 11 years vastly above the growth rate of either the economy or corporate profits.
“Litigation left unchecked is costing more for businesses than it was 10 years ago, and that rate of growth is unsustainable.”
Research published last month indicated that the appeal of the Commercial Court remains strong, with the number of judgments handed down in the past 12 months and the number of litigants at six-year highs.
Meanwhile, recently published minutes of the Commercial Court users group’s April meeting showed that new claims numbers were broadly in line with last year (860 in the year to 30 September 2020), of which about a third related to arbitration, “with a good number of frauds, aviation and shipping cases”.
The minutes went on: “There appears to be a slight uptick in insurance cases which is perhaps not entirely surprising. To date the court has nearly as many insurance cases as for the whole of last year
“There are quite a lot of low value claims – approximately 50 under £300,000. The court is starting to look carefully at cases and whether they do properly belong here.”
The minutes also made clear the intention to return to in-person hearings, potentially with a remote element.
“The message is that the court will require rather more persuasion that trials should take place remotely, but that does not mean that all hearings will be in court,” they said.