Recession-related litigation – especially contract claims – on the rise, figures show

Rowles-Davies: quadrupled funding facility

Recession-related litigation is growing, new figures have shown, with the number of contract claims in the High Court soaring by nearly half in 2011.

In all 982 contract claims were issued in the Chancery Division 2011, compared to 683 the year before, a rise of 44%, with breach of contract and debt the main causes of action, according to the Ministry of Justice’s recently published annual court statistics.

There were similar trends in other courts – breach of contract claims in the Queen’s Bench Division also rose 44% to 969, while breach of contract/agreement/debt claims in the Commercial Court rocketed 49% to 722.

The sharp rise compared with a more gentle 6% increase in Chancery Division cases overall (to 35,238). This hid significant variations, however, including a 19% jump in intellectual property litigation (to 667 claims) and a 10% rise in Bankruptcy Court applications (to 12,121), as well as a 17% drop in professional negligence cases (to 184), the majority of which were against solicitors.

There was overall a 16% fall in proceedings issued in the Queen’s Bench Division (to 13,928). Of those started in the QBD of the Royal Courts of Justice, a quarter related to debt and around one in five related to breach of contract.

Nick Rowles-Davies of leading third-party litigation funder Vannin Capital said the trends showed how recession-related litigation, such as debt and breach of contract, is playing an increasingly significant role in the courts.

“Our own experience – from the ever-growing number of approaches for funding we receive – matches the trends identified by these statistics. The kinds of disputes the courts are seeing are often caused by the difficult situations people find themselves in during a recession; this is compounded by the fact that, by definition, they struggle to get the money together to take their case to court.

“That, of course, is where we come in and the demand we are seeing is in part why we recently quadrupled our funding facility to £100m for the coming year. This is litigation funding providing access to justice for people who might very well not be able to afford it otherwise.”