Court claims drop by 65% in four weeks

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The number of new claims in English courts has dropped by 65% in the past month, as ‘severe market stress’ puts the brakes on expensive litigation.

According to research by a litigation analytics start-up Solomonic and disputes firm HFW, just 29 claims were filed in the week commencing 30 March - less than half than in the same week last year – with the overall number of new claims in the English courts falling by 65% over the past four weeks.

The drop was attributed to the economic impact of coronavirus. However, solicitors predict a wave of litigation and arbitration once the crisis has passed.

Damian Honey, dispute resolution partner at HFW, said: ‘Whenever there is an event that causes severe market stress, there is always a lull in disputes activity before the claims start coming through, as everyone’s immediate priority is taking stock of the situation – particularly in relation to contractual positions – and managing cash flow. When you’re in survival mode, you don’t typically go around commencing what could be expensive litigation.

‘We saw the exact same thing happen with the financial crisis in 2008 – the disputes market went really quiet, but that eventually gave way to a surge of litigation and arbitration. We expect the same to happen with Covid-19.’

Litigation funding could accelerate the arrival of coronavirus-related claims, HFW suggested. Adam Strong, HFW litigation funding committee chair: ‘Litigation funding was a fledgling industry in 2008, but it’s now very much in the mainstream – that could have a huge impact. Having access to third-party funding allows claimants to not only de-risk litigation, but also to completely remove the legal fees from their balance sheets.

‘That will prove extremely attractive to many companies at the moment, and could mean that we start seeing Covid-19-related claims coming through sooner than they might otherwise.’

*The Law Society is keeping the coronavirus situation under review and monitoring the advice it receives from the Foreign & Commonwealth Office and Public Health England.