Clive Zietman introduces the 2021 edition of the Legal Business Disputes Yearbook as he does each year, by looking ahead to what the litigation market may have in store in the year ahead.
One of the strangest features of Covid-19 is that it manifests itself in the human body in a random and unpredictable manner. The same can be said of its effect on the world of commercial disputes. My view is that nothing ever quite pans out in a way many commentators assume.
If one thinks back to the financial crisis of 2008, the only racing certainty was an economic downtown. To that extent, the same might be said of 2021. The prediction 13 years ago was that we would see the usual raft of fraud and insolvency work that typically accompanies a recession. It was anticipated that events would mirror those of the early 1990s, which gave rise to a boom in white collar crime cases and resultant professional negligence claims arising from corporate failures. It did not play out in that way. The scale of the frauds made them almost beyond the scope of litigation. The banks did not rush to insolvency proceedings since they themselves were on the brink of collapse and had no appetite for repossessing worthless assets.
Today’s impending global downturn looks like it will dwarf the 2008 financial crisis when governments stop the Covid bail-outs and start taxing. What we are seeing currently is big government splashing eye-watering sums at the economy. This spending frenzy may stop the tide going out for a while, but not indefinitely.
So what sorts of disputes are likely to emerge? There can be no doubt that a wave of personal and corporate insolvency is on the cards in 2021, but will that mean disputes? Almost certainly it will, as issues of priority, valuation, misfeasance and the inevitable blame games begin. But we may not see mass repossessions, or at least not immediately. Will an aircraft leasing company want to repossess aeroplanes that are unable to fly anywhere? Will a bank wish to repossess a shopping centre that is devoid of open shops? My prediction is that insofar as they can be picky, creditors will only take action that will improve their own balance sheets. In the current climate, their options are limited.
Some litigators are smacking their lips at the prospect of mega disputes emerging as a result of Covid’s disastrous economic consequences. Yet a free-for-all litigation bonanza is likely to be tempered by a keen desire to avoid the courts, if possible. With belt-tightening and pressure on legal budgets, many corporates will see litigation as a last resort and avoid anything that does not look like it makes economic sense.
My guess, for what it is worth, is that the litigation spilling out of the Covid era will come from left field. In the new era of collective redress, perhaps we will see mega claims arising from a vaccine disaster or some other unimaginable fall-out from this awful saga? Even if I had a crystal ball of the most accurate variety, I am not sure that it could give an accurate forecast for the year ahead.
Read the original article here.
The full Disputes Yearbook 2021 can be accessed here.
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