New figures show that the number of High Court cases concerning FTSE 100 companies has fallen by 33% since 2017/18, from 193 in that year to just 130 in 2018/19.
It does not seem that mediation or ADR have much to do with this fall. A reduction in claims against banks accounts for much of the fall; the number of such cases has more than halved since 2015/16, from 179 to 63. Thomson Reuters suggests this is because many post-financial crisis claims, such as those relating to the alleged mis-selling of interest rate swaps, have reached their conclusion.
Thomson Reuters warned that companies should not be complacent, however. Raichel Hopkinson, head of the Practical Law dispute resolution service at Thomson Reuters, said: ‘While the number of High Court cases involving FTSE 100 companies has declined, the rise of litigation funding for class actions means that businesses may face more claimants backed by funders looking to maximise returns. ’Litigation funders have substantial amounts of capital to deploy. There are billions of pounds seeking investable cases, and backing large group claims against major businesses is a strategy that many funders are prepared to use on the right terms.’
Hopkinson also warned that economic slowdown could also trigger a burst of claims. ‘While the flow of legal claims driven by the credit crunch is now ending, there is potential for the global economic slowdown to trigger more of the claims that typically accompany stress in the economy.
‘Similarly, it is thought that a significant fall in the stock market might see a resurgence of disputes between counterparties to financial contracts including derivatives.’