New claims in High Court bounce back above 2019 level

HFW: Clients keen on third-party funding

High Court activity has already recovered to pre-Covid-19 levels following a sharp slump during the height of the outbreak, new research has found.

At least 70 new claims were filed in each of the last three weeks of May, having previously fallen below 30 new claims per week in March – a drop of 56% on the previous year.

According to City law firm HFW and litigation analytics company Solomonic, the High Court is now slightly busier than it was at this point in 2019 (61 new claims per week on average) and 2018 (63).

Damian Honey, a dispute resolution partner at HFW, predicted that Covid-19 would ultimately result in a surge of litigation and arbitration.

“Events of severe market shock are always followed by a lull in disputes activity, as businesses are focused on survival – not entering into potentially expensive litigation. We saw that with the global financial crisis in 2008 and we’ve seen it again with Covid-19.

“The current uptick in claims being filed in the courts suggests that the market is now coming out of that initial crisis stage. Businesses are starting to look ahead more confidently and consider issuing proceedings – particularly in relation to contractual issues that have arisen due to the outbreak.

“The high levels of market uncertainty mean that disputes activity could remain patchy over the coming months, but we ultimately expect the market consequences of Covid-19 to result in a surge of litigation and arbitration.”

Last year, HFW agreed a £25m portfolio litigation funding facility with Augusta Ventures, while also unveiling a development partnership with Solomonic.

Adam Strong, chair of HFW’s litigation funding committee, said the continued rise of litigation funding could help fuel this surge in disputes activity.

“Businesses are understandably very focused on cash flow, costs and risk at the moment, so the ability to use third-party funding to not only de-risk litigation but also to completely remove legal fees from their balance sheets is extremely attractive.

“We’re already seeing a lot of interest from clients in litigation finance and we expect that continue.”

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