Once again, as part of our research into the global litigation market, we sought to identify trends and changes, and to reflect interesting points raised by respondents. The practitioners we spoke to highlighted a number of significant trends emerging around the globe. Economic change was a key theme in many jurisdictions and with this has come, in general, a rise in the number of disputes – an effect seen in a range of industry sectors, with litigators in the corporate sphere receiving particularly heavy caseloads in light of the ongoing bull market. In terms of the legal market competition is rife, as large firms and boutiques set out differing pricing arrangements to attract clients. The coming year looks set to be a strong one for those working in litigation.
Globally, share and asset prices have largely risen in the past year, while global economic growth, although not spectacular, remains stable. This year has also seen the emergence of not one but two trillion-dollar companies in Apple and Amazon. Such observations paint an apparently tranquil picture of the business landscape, a market in which volumes of corporate disputes would be expected to fall as shareholders reap the benefits of rising stock markets. However, there is some distortion in this picture, and the current sentiment of the disputes space isn’t fully captured.
A number of trends around the world are creating uncertainty from those handling complex commercial litigation. September 2018 marked 10 years since the collapse of Lehman Brothers, the climactic overture of the greatest financial crisis for nearly a century. At the time of the crash, the immediate question for litigators in the space had been how they were going to handle the extensive workload that would arise from the plethora of failures and disputes emerging from the global collapse. In March 2018, Lehman Brothers Holdings Inc’s bankruptcy estate announced a $2.38 billion compensation package to end mortgage claims in the USA. In June, a High Court judge in England sanctioned a scheme of arrangement put forward by PwC (Lehman Brothers’ administrator), which in turn brought to a close litigation in Europe. In many ways, the story of Lehman Brothers is the story of the financial crash; and for litigators their caseloads have followed a similar arc. As practitioners in Europe we spoke to stated, while they “have not yet seen the end of the cases prompted by the financial crisis”, the bulk of the “aftermath of 2008 is coming to an end”. Undoubtedly financial disputes will never be a quiet area of practice, but there is some uncertainty as to where the work will come from in the coming years, with no clear answers on the horizon.
No discussion of legal uncertainty would be complete without a mention of Brexit. Our sources highlighted the fact that European jurisdictions are moving to establish English-language courts in what has been described as “a clear effort to take high-profile, complex cases from London post-Brexit”. Judgments from these courts would be freely transferable within the EU, unlike London cases, and so could make them an attractive option for clients. While much remains unclear, the potential effect on the caseload of London-based litigators could be immense. The future relationship between the UK and the EU remains to be thrashed out at the time of writing, however, and numerous respondents we spoke to held out optimism that a deal could be struck that retains London’s attractiveness after Brexit.
A further area of uncertainty is the continuing and convoluted saga of the trade war instigated primarily by the Trump administration in the US. Each month has appeared to provide the same cycle: an escalation and then a thawing of tensions between the US and the global trading community. At the beginning of the year, NAFTA’s very existence appeared under threat, only for a new deal to be on the cusp of formation by September. Europe, for its part, had baulked at the suggestion of significant tariffs on its automotive exports earlier in the year. Yet, after a meeting in Washington, DC in July between Jean-Claude Juncker and Donald Trump, an agreement was made to “work together towards zero tariffs”. For litigators, the seemingly never-ending newspaper headlines concerning trade and customs law make advising clients on litigation strategies difficult. Sources wondered aloud to our researchers whether this is beginning to affect the volume of litigation, noting that “in bad times, nobody’s doing deals and then there’s less litigation whereas in good times, clients might have gone for it”. Preparations to stake a damages claim may, a relatively short while later, be superfluous. Some sources worry about the extent to which this uncertainty will continue to hamper work volumes over the coming year.
In spite of, or perhaps resulting from the above uncertainty, there are a number of sectors seeing high levels of litigation activity in recent months, according to sources.
One such area has been antitrust. Governments in many jurisdictions have become increasingly concerned with consolidation in a number of industry sectors, with technology firms receiving particular scrutiny. With two of the so-called “FAANGS” companies (Facebook, Amazon, Apple, Netflix and Google) having reached trillion-dollar market valuations, the market power of multinational firms has come under increasing scrutiny as their cornering of their markets grows ever more complete. Significant transactions have come under antitrust scrutiny, with AT&T’s proposed acquisition of Time Warner being perhaps the most publicised recent example of this. Our research for WWL: Competition 2018 saw lawyers on the advisory side describe increasing complexity in their merger work as authorities coordinate their efforts internationally. This view is supported by practitioners we spoke to in litigation, who note a “steady rise in antitrust litigation and follow-on damages claims”.
Post-M&A disputes have also been on the rise in recent months, with European commentators in particular highlighting “a big change in the market from six or seven years ago”. Low interest rates and high asset prices have driven the pace of mergers to new heights in recent years. Coupled with this, there has been an increase in the incidence of contractual ambiguities or warranty disputes, claims of fraud and, perhaps more cynically, attempts to extract further value from deals through litigation. Disputes in this field are not limited to long-established industries; for instance, one source noted that “you see more and more post-M&A claims in the renewables sector”. Litigators can expect to see this type of work remain buoyant as long as monetary policy continues to be loose and the merger space remains active.
Elsewhere, sources in the labour and employment space highlighted a rise in the incidence of sexual harassment claims over the past year. Undoubtedly fuelled by the #MeToo and #TimesUp movements, a rising number of employees have filed complaints over misdemeanours. Research conducted for the BBC showed that “40 per cent of women and 18 per cent of men had experienced some form of unwanted sexual behaviour in the workplace”. The momentum behind these campaigns shows no signs of slowing, and lawyers can expect cases relating to sexual harassment claims to keep rising as more individuals come forward.
Class actions have been mentioned with increasing regularity in debates around the globe in recent months, thanks largely to corporate scandals. Sources told us that this typically American type of claim is beginning to gain traction in other jurisdictions. The recent Volkswagen emissions scandal has brought discussions of class actions to the fore among German and EU legislators. Earlier this year, the state-funded Federation of German Consumer Organisations (VZBV) stated that it would file damages against Volkswagen on behalf of consumers. Compounding concerns for business interests in the region, the European Commission has stated that it plans to enable the filing of class-actions. These proposals for enhanced consumer protection have been opposed by the American Chamber of Commerce to the European Union who state that “the Commission’s proposal… would only serve to enrich law firms and the associated third-party funders”. The litigators we spoke to appear to agree and have been advising clients in the build up to such regulatory change.
As highlighted above, third-party funding is an increasingly important aspect of litigation – class actions have certainly benefitted from it in recent years. However, its uses are not limited to this type of litigation. Practitioners working in the field of asset recovery have raised with us the importance of third-party funding for the increased willingness of clients to utilise asset recovery litigation. Clients are now able to hedge their costs through the use of third-party funders and litigators are hopeful that this will make the process of attempting to recover assets more attractive. What once was a risky, drawn-out and costly process has been transformed by third-party funding into a dynamic and accessible avenue of attack.
Litigation remains an intensely competitive space for firms. Sources commented on the unsurprising desire on the part of clients to push down costs wherever possible. One impact of this has been an increase in the number of boutiques that have emerged in recent years as lawyers seek to escape conflicts and respond to the downward pressure on prices from clients.
There is an emerging partition between global firms that offer clients access to large teams and expertise in multiple jurisdictions and boutiques offering specialist understanding of clients’ disputes and often lower fees. This divide is reflected in our research, with a mix of large and small firms garnering much recognition from market sources. In Europe, Clifford Chance and Mannheimer Swartling both have significant numbers of litigators highlighted in our guide, while practitioners from boutiques also perform well. In North America, Canadian specialist litigation firm Lenczner Slaght Royce Smith Griffin stands out, with a number of a global outfits such as Hogan Lovells and Gibson, Dunn & Crutcher also performing strongly.
For practitioners working in the field of litigation, there remains much to look out for over the coming months. Litigation remains popular among clients around the globe and across a number of industries. With legislative changes on the rise and authorities becoming ever more assertive, the outlook for the space over the next 12 months appears to be a positive, and interesting, one.