Editors' Blog

Maxwell, Barings... Lehman - are litigators to return to centre stage?

Posted 17/09/2008 by John Malpas

Maxwell, Lloyd’s of London, Barings, BCCI…  in recent years, if these cases were mentioned at all it was in the context of the decline in big-ticket litigation and the need to clamp down on spiralling legal costs.

But at the Legal Week Litigation Forum this morning, these cases were being referred to in a distinctly different light – not as dinosaurs on the verge of extinction, but as examples of what could happen in the wake of Monday’s collapse of Lehman Brothers, an event conference chair Lord Falconer colourfully described as “the largest insolvency in the history of capitalism”.

For anyone who attended last year’s forum, there would have been an element of deja vu to proceedings, given that the 2007 event took place against the backdrop of Northern Rock’s mounting difficulties.

Then there were high expectations that, having spent years in the shadow of the transactional colleagues, litigators were about to have their time in the sun.

In the event, as Falconer observed this morning, the anticipated flood of credit crunch-related litigation has yet to materialise.

Falconer’s message was that Northern Rock, Bear Stearns and the like were peanuts compared to Lehman. They - and many other institutions - may have run into trouble, but they didn’t go bust.

“Until now there has not been a great flow of people trying to blame somebody for the mess the financial institutions found themselves in,” he said. “My own view is that this is about to change.”

Ever the politician, Falconer was careful to emphasise the pain that everybody will feel as a result of this week’s events, not least because of its impact on their pension funds.

But he did promise stimulating professional times for litigators as they dealt with a flood of big-ticket litigation in the wake of not just Lehman but a rash of smaller corporate failures. He even went so far as to say that we were entering a new era of litigation and disputes.

While many delegates and speakers agreed that insolvency ‘unlocks’ litigation like nothing else does, I didn’t get the sense that many people were quite as confident as Falconer about the imminence of a new litigation era.

Indeed, some delegates seemed a little shell-shocked that, suddenly, Lloyd’s of London and BCCI were being spoken of in an entirely new light.

Perhaps they simply needed a little more time to digest recent events, but there certainly wasn’t the sense that the floodgates of litigation had opened quite yet.

And it wasn’t long before the conference found itself on more familiar territory as delegates and speakers collectively rolled up their sleeves and set about trying to make the courts more efficient and litigation more predictable.